Free Retirement Planning Tips

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Hello-

While you can calculate your retirement on your own, the best way to obtain an accurate forecast is to seek the services of a financial planner.

A financial planner can be objective about your finances.  He or she can advise you as to the approximate amount of your pension based on the contributions you have made over the years.

Moreover, they will probably advise you to begin contributing the maximum amount of pension contributions the closer you get to retirement age.  This is significant because it can boost your pension earnings more than you know.

In order to receive the best advice, you have to do a little calculating of your own.  The planner may ask when you plan to retire, whether you plan to move to another state, travel, pursue higher education, and what type of lifestyle you hope to maintain.

You also have to take into account your healthcare expenses.  For example, a city worker may have a healthcare plan such as Blue Cross/Blue Shield and GHI (Group Health Incorporated).  This type of insurance is worth approximately $12,000 a year and is a necessary component that can alleviate expenses resulting from ill health.

If you would like to calculate how much you will need for retirement, there are many online calculators you can use.  One is located at: How much you need to retire calculator

You simply enter your current annual income, 70% post-retirement income, expected annual pension, expected annual Social Security payment, current age, age at which you will retire, and life expectancy.  Note these are approximate figures.  The figure of 70% is the amount of your income that one would need to retire comfortably.

Once the calculations are made, you can then proceed to increase your pension contribution, if applicable, and/or begin a savings program outlined by your financial planner that will yield a high rate of interest and allow you to retire knowing there will always be money available to you.

If you are years away from retirement, calculating your pension income now will give you a clear and concise measure of what to expect.  Here is an example of an individual who did not plan well for retirement.  A man retired at age 57.  He contributed less than 10% to his pension and the result is that he now receives under $1000 a month.  Although he did consult a financial planner, the pressure of the job was such that he had to retire early for health reasons.  He is currently working full-time in another position.

Thanks,

Adam

Hello-

Re: Saving money for retirement

It’s never too late to start saving money for your retirement. The sooner the better though. The earlier you start saving the earlier you get to start enjoying the benefits of compound interest. As 2007 comes to a close and 2008 jumps out at us, start making your New Year’s resolutions that will benefit you for many years to come - especially in your retirement.

If you have not started investing in your company’s 401k plan, do so now. Make an appointment with your HR manager to get you the paperwork you need to start automatically investing in your 401k. If your company offers a matching contribution of whatever you put in then make sure you invest the maximum amount they match. If they match 3%, at a minimum you should put in 3%. If they match 6%, then you must at least invest this amount. You are literally giving away free money with each passing paycheck if you do not take advantage of the company’s 401k matching program.

Using the company’s 401k match can mean the difference in you eating at McDonald’s in your retirement or eating at Chris Madrid’s in your retirement. Those burgers are awesome. If you’re not familiar with Chris Madrid’s, if you’re ever in San Antonio check them out. Great burgers.

Anyways, back to my point. You can save a lot of money effortlessly for your retirement by just investing in your company’s 401k so do it as soon as possible.

If you’re already enrolled then think about increasing your contribution by a percentage point or two. Then once you max out your 401k, it’s time to start thinking about an IRA. They can automatically withdraw this from your paycheck and put it into an IRA and invest it in stocks and bonds of your choosing.

Don’t forget about long term care and life insurance. Millions of people will need long term care as they get older. The earlier you buy it, the cheaper it will be for you. And you do not need to be rich to invest in long term care insurance.

Another thing to keep track of is your Social Security benefits statements. You should get these every couple years and they indicate approximately how much you should expect when you begin to withdraw from Social Security. Make sure the incomes reported on these are the same as what you actually make. You want to make sure, your full income gets reported so you get the full benefit of Social Security you’re eligible for.

One last thing is to look for opportunities to make more money so you can save faster and possibly even retire sooner. There’s nothing like the feeling of being able to retire early. You should do it just for the looks your coworkers will give you. :o)

Keep these tips in mind as you start planning your goals for 2008 and for your future retirement.

Here’s to a healthy, happy, and prosperous New Year!

-Adam

Free Retirement Planning Tips

Saving money for retirement can be easy or difficult depending on your current salary. If you are like 75 percent of the American population, earning just enough money in your current job to meet your monthly bills, then it’s time to do some serious thinking on how you are going to live when you retire.

Social Security isn’t going to meet all your monthly payments. That is, if Social Security, or some revised form of it, still exists when your day of retirement arrives.

Here are some tips on how to save today for your future. No matter how little, or how much, you earn today.

Estimate how much you must save to give you the income you know is necessary for you to retire in comfort.

Experts suggest that you will need an income equaling about 75 percent of your current take home pay. Be sure to estimate a rise in inflation which has historically been about 5.3 percent per year.

Figure out how much of your current salary will need have to save each year to achieve your retirement goal by counting backward from the year you plan to retire to see how many years you have before retirement. Include the possibility of being on a fixed income for as long as 20 or 30 years. Depending on how many years you have until retirement a U.S. Treasury bond that guarantees six percent interest might be considered, while stocks might have the potential for a much higher return, but has a much higher risk of loss.

A financial planner, stockbroker, or an accountant, can offer guidance, expertise and access to knowledge about almost any type of investment or retirement planning concerns.

Spread your money out over a variety of investments. Some will prosper while others may fail.

Set up an automatic draft from your bank account from your paycheck so that a portion of your income goes directly into your retirement funds. Pay off major debts, such as home mortgages, college loans and other significant cash-flow drains, as quickly as you can.

For more information visit: http://www.apluswriting.net/finance/retire.htm

Golden rule #5 for your 401k: Diversify

Diversify. Diversify. Diversify.

Financial experts agree that the best way to hedge against risk is to diversify so that you own a variety of stocks and bonds. That means paying attention to funds, and company stock that may be in your plan.

“Asset allocation is the most important thing,” says Dick Bellmer, chairman of National Association of Personal Financial Advisors.

That’s a message more employees need to take to heart. These days, plans boast on average 19 funds, according to PSCA. But that doesn’t mean workers are necessarily spreading their risk. According to Hewitt Associates, workers generally invest 401(k)s in four asset classes, half the number that are typically available through their program.

One easy way to ensure that your investments are diversified is by investing in lifestyle funds, which automatically adjust holdings depending on age and retirement goals. Planners recommend them as a great way to get started, especially for younger workers who need help picking investments. However, as you approach retirement, you’ll need to tailor your investments to your personal goals.

“They take the decisions out of your hands, so pick one of those. Find one that feels right in terms of your risk tolerance and age and then it’s more or less a no-brainer,” says David Foster.

Meanwhile, tread lightly if your company contributes matching funds exclusively in their stock, or if your shares have gone up. Those investments could quickly make up a good chunk of your 401(k) balance. And if that’s the case you’re at greater risk of watching your savings evaporate, should that single stock drop in value. So what’s the ideal limit? “Personally, I like to see no more than 5 percent,” says Bellmer.

Many workers need to take this limit to heart. On average, company stock makes up 24 percent of 401(k) balances, according to PSCA. If you want to rebalance your shares, there’s good news. It’s becoming easier to diversify. Employers may make you wait a certain period of time to do so, but 46 percent of plans that make matching contributions exclusively in company stock let employees diversify those shares at any time. That’s up from the 15 percent who did so back in 2001, according to Hewitt.

Read the other 9 rules below:
10 golden rules for your 401(k) (Bankrate.com via Yahoo! Finance)

Follow these rules for wise investing of your 401.

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