Retirement Planning – Simple, Effective Methods

When asked the basic question, “How do you see yourself retiring?” many respond they would like to live in retirement at least the same way they do now, just without the work and stress. Some go a bit further adding in travel and experiencing the world or seeing the family once they have more free time. However, in almost every case, the goal and desire doesn’t usually match the funds put away for them. As a result, the planning involved needs a lot more work on the serious to match up with the dreaming side.

Time

Clearly those who start earlier have the advantage. Just having ten years more devoted to saving for retirement can make a big potential difference just in terms of gains and compounding on the principle saved and invested. So if a person can start putting money away early, he should do so at every chance. Even if the market takes a downturn with investments, overall those with time on their hands can not only recover but still make gains regardless. This in turn allows such investors to outpace inflation as well as taxes with significant gains built up with 20 or 30 years of saving. However, even those 10 or 15 years out can still make significant strides. They simply need to take advantage of the time available and put more away in savings to make up the difference.

IRAs and 401Ks

Where a person is eligible to use an IRA, he should. Even though a person can only deposit $5,000 a year until age 50, which adds another $1,000, the money can grow tax free, especially in a Roth IRA. Any other investment approach will be taxed, which adds another bite aside from inflation to that money’s growth. So putting money away each year for 10 to 30 years in a Roth IRA can shelter anywhere from $50,000 to $150,000 without taxes, not including the gains and interest earned tax-free. That’s a significant tax shelter for retirement planning.

401Ks and traditional IRAs work well for pre-tax monies prior to payroll withholding. While the money is still taxed, it can be sheltered until a person is much older and in a lower tax bracket. There’s no sense throwing good money away on needless taxes, especially if a company is offering a deposit match to 401k deposits. That’s free money in addition to tax deferment! Done right, a person can stuff away $55,000 a year in IRA or 401k tax shelters.

Consider a Second Income

Most people see their primary income committed to bills and living expenses. However, if time is available, a person can easily pull in a second part-time income via freelancing or a second job. This allows additional income which can be directed straight into investments and retirement saving without any liabilities. It’s one of the fastest and most powerful ways to save for retirement.

Conclusion

Retirement planning can be done in a number of ways, but all methods agree on one principle: save as much as possible as long as possible.

Author Bio
Michael is one of the leading Sydney Accounting experts and recommends that all people consult a finance professional when planning for their retirement.

Read More

Financial Tips To Plan For Your Retirement

Retirement is a stage where every individual needs to face the fact that their source of income has stopped completely. Usually people get retired at the age of 65 and are allotted with private and public pension aids. But in some case the person may be forced to get retired depending on the physical conditions. You even have people under semi-retirement where you have less working hours.

The age limit for retirement varies from one country to another. Depending on the physical background a person can retire at any age. The standard retirement age is normally from 50 to 70 but the age limits varies from males to females.

Tips to plan your retirement:

  • Savings: Make savings a habit. If you haven’t started saving give time for it and start working on it. Having saving accounts will be useful at the time of retirements. Aim for a goal and stick to it as savings will be the only means of funding yourself in any sort of any emergencies.

Savings for Retirement

  • Make use of retirement calculator. You have to calculate to get the evaluation of how much is to be saved as to maintain the living environment to the standards.
  • Grab the benefits: When planed for retirement makes sure there are benefits available. Millions of retired workers or adults have many benefits from state, federal and local organization. This includes all the discounts and benefits related to national parks, aid to property tax.
  • Get an idea of retirement needs. As per the experts opinion it becomes difficult to maintain the same standard of living after retirements. The strategy to face financial crisis and at the same time making a successful retirement plans is possible only through future planning.
  • Pension planning: Pension plan is secured insurance plan for financial security in your old age and these are the best for long term financial planning. Research for the companies or organisations offering best discounts or offers on pension plan.
  • Insurance: Medical, accidental, death and complete life insurance planning is a must in old age. Get an idea on long term insurance policy where, in this process the more you wait, the greater you required to pay. For example, if you locked your policy at the age of 50 you will be amounted to pay lesser when compared to the age of 65, the repayment amount increases per month.
  • Create a retirement account for placing your savings of retirement and make sure not to use them. This plan will be helpful in tax wages and will be allotted with automatic deductions.
  • Social security benefits: These benefits are provided by the government where the payments are done based on their age limits
  • Finance for health and medical care need to be maintained by planning for health policies and different membership cards for medical allowances
  • Plan for available loans after retirements. Every bank is allotted with retirement plans and even offering emergency loans such as payday loans. Old age is a period where unexpected situations may arise for the family members therefore take a payday loan as it is easier and faster during emergencies.

Read More