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7 Steps to Retirement Planning for a Safe and Secure Future

Retirement is a complicated thing, one day you feel good that you will finally relax and the other day you feel worried about your finances. But people who plan early for retirement may have little or nothing to worry about.

Retirement planning is an ongoing process, and you would have to try to anticipate things. Although nobody can predict everything and it will be better to try to be close enough to get some benefit.

Many people are too afraid to retire because they worry about how things will go when that income is cut off. However, retirement planning is not a hard science and following these 7 steps can help you secure your future.

1. Retirement Planning – Evaluate your financial situation

First, take an inventory of all your current assets, liabilities, income, and expenses. You can sit down with your retirement planner and estimate what your responsibilities and expenses would be. When you’ve retired, some expenses may stay the same, like groceries and insurance, and others.

However, some expenses may increase, such as travel costs, vacation costs, and spending less on growing children. Some expenses would also be covered by pension and social security. Highlight your worries and questions that haunt you at night and discuss them with your planner.

2. Calculate the value of your Assets and Liabilities

Here are some tips on how to calculate the value of your current assets.

  • Write down the current amount in each of your accounts where you keep cash and liquid savings. These include checking, savings, and money market accounts and certificates of deposit.

  • If you have savings bonds, calculate and determine the current value or call the bank to find out the current value.

  • Call your agent and find out the cost of your whole life policy as well.

  • Invested in stocks, bonds or mutual funds, then check the value on financial websites or on your latest statement.

  • Use the current value of your home and other real estate.

  • List the current value of your pension, IRAs, or other retirement plans you have in mind. Try to find out the value if you decide to collect them today.

  • Also consider other assets, such as businesses and rental properties.

  • The balance of your home mortgage is a monthly liability.

  • Also consider all other mortgages or home equity loans.

  • Record the balance due on credit cards, installments, loans and investment accounts.

  • List all current and past due bills you owe. These include utility bills, doctors, dentists, phone, water, gas, property tax, etc.

3. Know what you want

We all want so much that we get confused with so many things. Make a list of the things you think should be in your lifestyle after you retire. Consider everything that may seem small to you so that you are prepared for it.

Do you know how much money you would need to retire and live comfortably?

Well, research says you need to replace 70-90 percent of your pre-retirement income. Helps you estimate your goal based on your current income. It is a rough estimate though, and keeping this in mind allows you to be on the right track. Maintaining factors such as vacation habits, medical expenses, house rent will have a substantial impact on how much you need to save.

If you can save an adequate amount of money for retirement, you’ll also have options to live the kind of life you want. Proper retirement planning allows you to overcome any barriers and limitations, and increase the leisure of the golden period of retirement. You might even have enough to leave something for your next generation. Don’t be afraid to aim high!

4. Cash flow planning

The present value is significant for your retirement planning. It is the amount of money you need in your account today to plan and save for your future. Many people work with their financial advisors or retirement planners and set up individual retirement accounts to prepare for their retirement. You can do this while planning before and after retirement.

Planning before retirement

  • budget

It is almost impossible to start any retirement plan without a budget. Your budget is an essential part of planning your cash flow both before and during retirement. It is an essential analysis that must necessarily be done to determine how much cash is needed to maintain the lifestyle that you and your family are accustomed to living.

Once your budget is established, it should be reviewed annually to determine if additions and subtractions are changing the planned budget or if other adjustments are needed. A budget will also help protect your retirement and long-term savings.

  • emergency fund

Let’s face it, unexpected financial problems can arise at any time, and it’s not easy to avoid them too. Therefore, it is always a good idea if we have some savings to help you with your unavoidable needs.

Your emergency fund should be set aside liquidly because you never know when or what situation you might need them. The total amount should be decided by you and your family, and should be at your comfort level. Some people might agree to have $10,000 or $20,000, while others would prefer to put a larger amount toward their emergency funds.

  • Risk management

One area that is often overlooked in retirement planning is risk management. People generally focus on saving money for retirement. However, they forget to keep risk management in mind. Risk management includes auto insurance, home insurance, short and long-term disability, and health insurance. You should create policies regarding these and they should be monitored, reviewed, and updated as necessary.

Planning during retirement

  • budget

During retirement, your plan should start over with budgeting. Your income will change after retirement, so monitoring your cash flow during retirement is essential.

Budgeting after retirement isn’t just about managing cash flow. In fact, it also involves analyzing all your expenses throughout the year. It allows you to identify places where you can use other or less expensive substitutes or how to plan for significant spending.

  • Taxes

Tax planning is a huge ordeal for some retired people. It requires a lot of planning regarding the analysis of the sources of funds. It allows you to maintain your lifestyle and therefore you need to consider its tax consequences.

Different types of accounts have different types of tax consequences when they are funded or withdrawn. Retirement savings or qualified accounts are taxed at the ordinary income level. Non-qualified accounts are taxed at capital gains tiers.

When specific funds are needed to maintain a lifestyle in retirement, it’s critical to maintain the tax consequences of the accounts that fund your retirement.

Taxes shouldn’t be the only consideration when planning your retirement. Instead, it should be combined with other aspects of your overall financial planning.

  • estate planning

While the necessary estate planning is a critical component before retirement, post-retirement planning has a larger role in real estate management. It is essential that you determine what you and your family would like to settle for.

What is crucial is that the approach to estate planning is similar to your attitude towards risk management. Your estate plan should be regularly reviewed and updated.

5. Invest or save

It’s completely fine if you start late too. The key to expecting success is having a positive outlook and understanding that being late is better than never starting!

If you’re over 55, the government offers catch-up tax savings so you can get help saving a little more. Sometimes, the chances are that the savings account and employee pensions are not enough to reach your goals. That’s when you explore investment products.

It’s always good to have an investment on your side if you plan to improve your standard of living and stay financially strong for a long time. There are many different ways to save your money, but IRAs have proven to be the best. If you don’t already know, look online for guidance.

Build a diversified portfolio of savings accounts, investments, stocks, bonds, property, and insurance that can contribute to your benefit.

6. Strategies to maximize your Social Security income

Social Security is likely to remain an essential part of your retirement planning, and maximizing this benefit is essential.

To maximize your Social Security benefits, you need to sit down with your retirement planner and come up with effective strategies for collecting Social Security. The age at which you decide to withdraw funds will also have an impact on your lifetime savings. You can start receiving at age 62. Also, the longer you wait, the more you will be paid. If you wait until age 70, your payment will increase up to 77%.

Another important thing to consider is whether you are eligible for more than your own retirement benefits! You may also be eligible to claim “spouse” or even “survivor” benefits if you are married, divorced or widowed. Although, these are based on your records with your spouse, whether they are alive or dead.

Remember not to apply for two or more types of benefits at the same time. You will most likely lose one of them if you file both simultaneously. Strategize to claim the smallest first, then the largest.

Social Security uses the best 35 years of your working life to calculate your monthly earnings. If you have worked less than 35 years, you must continue to work. As this will also get you through some of your lowest earning years.

7. Check and repeat

The most important thing to keep in mind when planning for retirement is to focus on your savings. It needs to be updated and changed as necessary. Review your retirement plan annually. Nothing is set in stone and solid and stable planning leads you to live a life of happy retirement. All you need is to put yourself in a position to succeed and get organized.

Retirement is a life transition process. Like other major life transitions, retirement requires you to adapt and grow. It may involve some sad times for you like leaving your workplace, coworkers, moving house, having ups and downs, being short of money, etc.

However, these moments of mourning do not last forever! The efforts you make before and during retirement to maintain a balanced life will help ensure that your retirement is a smooth and pain-free process.

Although the act of withdrawal occurs in a day, or a week. In fact, the retirement process takes place during the years leading up to his actual departure. Retirement cannot be successful overnight and requires extensive planning and preparation. Your retirement plan may even change at times in your life, based on your interests, activities, and health fluctuations.

Trust yourself that you will adjust to retire, relax and enjoy!

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