1. How to Plan Your Retirement Retirement Planning

2. Planning Your Retirement Retiring past your full retirement age allows you to receive full Social Security benefits. Retiring at any point between 62 and your full retirement age slightly decreases your benefits, depending on how close your age is to 62. Your full retirement age depends on the year of your birth. The reductions in benefits are calculated such that the average beneficiary receives the same amount of total Social Security payments, regardless of when they retire. If in doubt, just use your full retirement age.

3. According to the SSA, the average American male can expect to live to around age 84, while women can expect to reach 87. However, one in four (for both genders) will live past 90 and about ten percent will live to 95. If you have not yet reached full retirement age and continue working, you may experience a reduction in Social Security benefits until you reach full retirement age. Considering whether or not you will continue working after retirement can also factor into your deciding how much you need to save. Start by estimating the length of your retirement. This is just your estimated life expectancy minus your expected retirement age. The percentage of your pre-retirement income may vary depending on how you plan to live after retirement. Alternately, you may want to save more if you have more expensive goals for your retirement, like if you want to spend it traveling or build your dream home.

4. However, you can estimate your benefits if you are close to retirement by visiting the SSA's website and using their calculation tool. At any point before you retire, Social Security benefits could be reduced, increased, or eliminated. If at all possible, it's best to plan for retirement until the assumption that you may not receive these benefits. Depending on your choices before retirement, you may receive income in retirement from company pensions or annuities you have purchased. Calculate how much you will receive from these benefits over the course of your retirement and subtract that amount from the total that you need for retirement. Figuring Out How Much You Need to Save

5. Determine if you have any sources of passive income that you will continue to benefit from in retirement. These can include rental properties, royalties, dividend securities, and business investments. Add up the total value of these payments over your retirement years and subtract this figure from the total. Subtract your Social Security benefits, income from annuities, and passive income from your total retirement cost. This figure is how much you will need to save before retirement in order to meet your goals.

6. Compound interest is a way to save money and have your savings work hard for you over the course of your working career. Compound interest is earned by most bank accounts and retirement accounts. Specifically, compound interest refers to a situation where interest is earned on the principal (initial investment) plus interest earned up to that point. This allows it to build value faster than simple interest, in which interest is only earned on the principal. Search online for a compound interest calculator with the option to add a monthly or annual contribution. Saving for Retirement

7. Input a reasonable interest for the type of investment account you plan to use and how many years you have until retirement as the time limit. Then, play around with the initial deposit and monthly contributions until you reach your goal for retirement. The interest rate that you use will depend on the nature of your investment account. Based on the monthly amount that you need to save, create a monthly budget that takes this amount into account. Even if you can't afford the full amount now, set aside what you can and put it into your retirement account. The important thing is to stick to your plan over the years until retirement, when it will all be worth it.

8. An easy way to shift money into your retirement account to contribute more when your children leave home. After they have started supporting themselves, take the money you were spending to support them and put it into retirement. This way, you won't even notice the increase in savings. You can prevent having to use this account for emergency expenses by keeping an emergency account that contains at least six months' worth of living expenses. You can prevent paying taxes on your retirement account when you switch jobs by rolling over the balance into a retirement account with your new employer.

9. Many employers offer the benefit of 401(k) plans. These plans allow employees to put aside a percentage of their salary each pay period to invest in stocks, bonds and mutual funds. Be sure to talk to your employer about the conditions of the 401(k) plan and matching, for example contribution/matching limits or time constraints. An IRA, or individual retirement account, is a type of account that can be used to easily save for retirement. Your contribution limit depends on your income, and some high-earning individuals or households may not qualify to contribute to an IRA at all. Talk to a financial professional about your options when selecting an IRA. Saving for Retirement

10. If you change jobs, you may have a gap period in which you are unable to contribute to retirement or unable to qualify for the company plan at your new job. Any gaps just mean that you will have to contribute more to the account later in order to meet your goal. For younger investors, you have the option of investing in high risk vehicles. For instance, you can buy international stocks or purchase large amounts of small- cap stock For those that have built up a substantial nest egg and are close to retirement, your best bet is to stick with low to moderate investments; you don’t want to lose your entire retirement the year before you plan on retiring.

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