While we all know we need to prepare for retirement, "How should I begin?" is one of the most frequently asked question we hear.
1. Start the Retirement Planning Process by Setting Your Goals
Start your journey toward retirement by creating a set of goals. You probably already have a good idea of how you want to spend your retirement, so now's the time to put those dreams and goals into writing.
Setting down specific, descriptive -- and realistic -- goals will help you define the steps you'll need to take to reach your objectives. Ask yourself:
- What do I want to accomplish in retirement?
- What lifestyle do I want to have?
- Do I want to travel?
- Where do I want to live?
- When do I want to retire?
2. Create a Budget as Part of Your Financial Strategies
Next, create a realistic working budget that includes:
- All sources of income
- The realistic cost of reaching your goals
- Your debt load
But creating a budget is the easy part -- the more difficult task? Adhering to your budget as you prepare for retirement. Remember:
- Even small dollar amounts spent here and there add up over the decades
- Living outside your means now results in a less comfortable lifestyle later
- Running up debt and using a lot of credit cards can harm your financial future
3. Work With a Retirement Advisor Now (not after you retire)!
Planning for retirement is a complex process that involves multiple moving parts; creating a strong team of professionals helps you navigate the process with ease. Your team should include:
- An estate planning attorney
- A tax professional, such as a CPA or an enrolled agent
- A trusted financial advisor who will help guide you through retirement.
4. Make Regular Contributions to Your Retirement Accounts
Make it easy to keep on track by creating a systematic method that takes the guesswork out of contributing to your retirement savings accounts. Your contribution method should be automatic, such as a monthly direct deposit, and pay yourself first. Avoid making exceptions. Above all, make your contribution system realistic and stay the course.
5. Stay the Course!
Finally, don't touch that retirement money. That means no loans and no cash. Whatever you do, don't take early withdrawals; not only will you lose money to penalties, you'll also add to your tax burden. Instead, keep your plans for your future in the forefront -- and ensure that you achieve the retirement you deserve.