4 Tips to Plan Ahead for Retirement

Are you looking forward to retiring one day in the not too distant future? Many people hope to enjoy retiring from the rat race, yet still being able to afford a comfortable post-retirement lifestyle. The key to being able to retire when you are ready to do so is to plan ahead for retirement.

These top tips for retirement planning can help you get started on the path to being able to retire when the time is right!

1. Create A Timeline
Time goes by quickly, and someday can be here before you know it. An important key for sound retirement planning involves setting a target date for when you hope to retire. When you have a date in mind for retirement, you have a concrete goal to use in retirement planning. By creating a timeline for your retirement goals, you'll avoid the pitfall of having "someday" sneak up on you before you've really started laying the financial groundwork needed for effective retirement planning.

2. Work Backwards from Your Goal
Think about how much money you are going to need when you retire, and work backwards to figure out how much you need to start putting away to get to where you need to be in order to have the level of retirement income that you need or want to have.

It's advisable to work with a reputable and qualified financial advisor to help you with these calculations. Many factors impact how much you need to save to accomplish your financial goals for retirement. Important considerations include: current retirement savings, likely social security benefits, home equity, additional debt, ongoing medical expenses, planned retirement activities, investment strategies, economic conditions, and more.

3. Take Advantage of Tax Deferred Retirement Investments
There are many retirement investment opportunities that allow individuals to defer paying income tax until funds are accessed during retirement.

Many employers offer qualified deferred compensation plans (such as 401K plans in for-profit businesses and 403B plans in non-profit organizations) that include employer contributions. For most people, regardless of financial status, it is advisable to participate in these programs to the fullest possible extent. When you don't contribute to a deferred compensation plan, at least up to the dollar value that your employer will match, you are leaving money on the table that could make a big difference in your financial situation upon retirement.

4. Review Your Retirement Plan Annually or More Often
Retirement planning is a process. You need to revisit your strategy, plan, and goals on a regular basis. Many factors occur in your life and in the economy that can impact how you can best plan for retirement. It's a good idea to sit down with your financial advisor at least once each year to make sure that your current investment strategy is the best one for you. 

Remember: You are the only person who can take action to make sure that you have what you need in place to retire when the time is right. Smart planning today means you can enjoy the retirement of your dreams tomorrow.

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