Top 10 Steps to Retirement Success
1. Educate yourself on the different savings options available. Each savings/investing plan works best for certain individuals and situations.
2. Discuss with your spouse your lifestyle and location aspirations for retirement. Then, using a retirement calculator, determine the annual retirement income you will likely need for that lifestyle. Don't wait until retirement to learn that you and your spouse have conflicting retirement goals, much less that you have failed to anticipate the true costs of retirement.
3. Determine how much you will need to save each month to reach your goal. The sooner you start to save, the greater the benefit of compound interest (the interest earned on reinvested interest). It is never too late, so start saving now.
4. Set up a plan to automatically save the appropriate amount each month. Remember, if you save less than the monthly amount determined in Step 3, you will likely need to add significantly to your savings later in life.
5. Participate in your company sponsored pension plan, or 401(k) retirement savings plan, especially if your employer offers a matching contribution benefit. Make sure take full advantage of the matching contribution.
6. Monitor your savings and investments over time to determine whether you need to make adjustments to keep on track with your goal. Chances are that no one plan alone will allow you to accumulate what you need for retirement. So you should think in terms of multiple retirement savings plans. The more you put away in all the retirement savings plans you qualify for, the bigger your nest egg.
7. Make sure your retirement plan has a financial cushion that allows for both expected and unexpected events, e.g., marriage, children’s education, a home purchase, etc.
8. Familiarize yourself with all your retirement plans – maximum contributions, forced distributions, tax benefits etc. – to avoid any penalties or unanticipted tax liabilities.
9. Plan a good exit strategy. How you will take out the money you have accumulated in the retirement accounts? Just as it is important to save for retirement it is also important to develop a spending plan (to better ensure that you don’t run out of money during your retirement years). Also, give careful thought to estate planning for yourself, your beneficiaries, and favorite charities.
10. Put passion into your retirement planning — so that your later years can, in fact, be the crowning chapter of your life.