We're happier today than we've ever
been before. And we're living the retirement of our
dreams!
Thanks to years of commitment to following our financial
plan, I was able to retire at 60 - with enough income to
allow us to lead the active lifestyle we enjoy so much.
What's ahead for us? Our first trip to Europe, next
spring.
Over the years we've seen again and again how
planning pays off.
Many powerful societal forces are making retirement
planning more important than ever. Longer life
expectancies, fewer defined benefit pension plans,
corporate "rightsizing," the trend toward
multiple job - even career - changes, and rising health
care costs all make planning for retirement more critical
now than ever before. So regardless of your age, where
you work or your life situation, you should start
planning now for your retirement. Even if you have a
company retirement plan and expect to receive Social
Security, those funds may not be enough to maintain your
lifestyle when you retire. However, if you start planning
now, you can take steps toward the retirement income you
want.
Retirement planning involves identifying your wants and
needs, developing a plan to achieve them, acting on your
plan and continually reviewing and revising your plan as
you approach retirement. Like most areas of financial
planning, retirement planning begins with defining your
goals.
Ask yourself these questions:
1. At what age do I plan to retire?
2. Will I start a new part-time career during retirement, or never work again?
3. How long do I think I'll need my money to last?
4. How much money will it take to support my household?
5. How do I envision my lifestyle during retirement? Days on the golf course? World travel? Pursuing a hobby?
6. Where will I live when I retire?
Once you know where you're going, it's time to figure out how to get there. Through retirement planning, you'll answer questions like these:
1. What provisions do I need to make to take care of my health care needs during retirement years?
2. How much money do I need to save to meet my goals?
3. How should I invest my money to maximize my retirement savings?
4. How will my assets, liabilities, expenses and savings change during retirement?
Remember, the sooner you start to save and plan for
your retirement years, the more prepared you will be.
Thanks to the power of compounding, early planning means
that just a small investment each year could create a
portfolio large enough to meet your needs later in life.
How do you get started? Take a simple step and start an
Individual Retirement Account (IRA).
Read more about IRAs.
What You Should Know About Retirement
Our Free Retirement and Investment Calculators
But where should you begin?
If you haven't already done so, your next step should be
to set up an Individual Retirement Account (IRA). In
today's world, it doesn't make good sense to count on
Social Security and your employer's retirement plans to
provide you with sufficient retirement income.
You can invest the money you put into your IRA in your
vehicle of choice-- mutual funds, individual stocks,
bonds, certificates of deposit, you name it.
One of the benefits of an IRA is that IRA contributions
are deductible from your current taxes, depending on your
income and whether or not you have a retirement plan
through your employer.
You have a choice of different
types of IRA accounts.
The traditional IRA allows you to make a contribution of
up to $2,000 each year. The income and growth in your IRA
are tax-deferred until you make a withdrawal, typically
when you're ready to retire.
You may be eligible for the Roth
IRA, which allows you to make non-deductible,
after-tax contributions. The benefit is there's no tax on
earnings from your Roth IRA investments, and any
withdrawals you make are tax-free, with some
restrictions. If you anticipate being in a higher tax
bracket when you retire then you're in today, you may
find long-term benefits in converting a traditional IRA
to a Roth IRA. But move quickly! There are special tax
benefits if you convert in 1998.
The Rollover IRA allows you
to maintain the tax-deferred status of your company
retirement plan when you move to another company or
retire. That means you aren't required to pay penalties,
taxes and withholding fees.
To open an IRA account, contact your bank, financial
investment firm or a financial adviser. You can also
conduct a search on the Internet by entering
"individual retirement account" on your
favorite search engine.
You'll find a list of banks, insurance companies and
financial investment firms that offer information about
their products and services.
Many of these sites have toll-free numbers you can call
for answers to specific questions on how to establish an
IRA.