Planning for retirement is an extremely crucial task that each citizen needs to focus on while still employed. Around 40% US citizens retire before they turn sixty. If you are planning to retire at such an age, its now time to choose a proper retirement plan according to your needs.
A retirement plan is aimed at providing you with a regular earning after your retirement. This eventually means, you would not need to depend on your children financially.
There are a few common mistakes that people make while planning for their retirement. Read on so as to avoid committing the mistakes and live a stress free life:
1. Plan your retirement well ahead:
The life expectancy of human beings has seen a growth at the recent times. It has been observed that people spend an average of 30 years in retirement. Hence, it is absolutely crucial to plan your savings properly so as to maintain a decent living standard post retirement. While planning you need to consider a few basic things like- your retirement age, minimum amount you require to maintain a healthy lifestyle, etc. Also check the worth of your Individual retirement account (IRA). Learn more about your pension schemes and various social security benefits.
2. Do not take out money from your retirement savings:
In case you want to take out the money, utilize it for smart investment moves. You should ideally aim to increase the cash flow into your account.
3. Start saving early:
Most people wrongly assume that they will have a lot of time for their retirement planning once all other financial affairs fall into place. But then, by the time you are 50, there is no time to plan for your retirement savings. So, it is wise to start as early as possible.
4. Monitor your investments:
Your retirement assets need regular monitoring just like your other belongings (for instance, home and car). You should regularly check your retirement account and reallocate your assets. It is absolutely necessary to do an investment assessment once a year to make sure that you are aware of the risk levels in your portfolio.
5. Relieve your debts:
You would not want to retire with the burden of debt on your shoulders. Make sure to repay all your debts. If necessary, enroll yourself for a debt settlement program.
Contribute as much as possible to your tax deferral accounts like Roth IRA and annuities. Also remember, you have to pay a 10% early withdrawal penalty if you withdraw your money from the retirement account before you are 59 years 6 months old. This will exhaust your savings earlier than usual.