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What is Retirement Planning?
Planning for retirement is the act of analyzing your current income and future goals so that you can decide on an action plan for how to save leading up to the day you retire. The planning process usually requires identifying sources of income, creating a realistic savings program, preserving assets, and managing risk. The task may seem daunting, but the outcome is well worth the effort. Retirement planning is the best way to ensure that your post-employment years are safe, secure, and financially stable. Since retirement is an essential part of most people’s lives, making the experience as comfortable as possible is the primary goal.
How to Start
Many people put off retirement planning because their post-employment years seem so far in the distant future. However, with more time spent planning and saving, your assets have more time to accumulate and grow. That means that the best time to start is now.
Many people begin the process by determining their unique needs and goals in retirement and basing their savings plans on this desired future. This might include opening a savings account, taking part in their employer-sponsored retirement plan, or even long-term investing. These are all great options, but finding the best ones for your unique financial situation is not always easy. It is essential, however, to determine the best combination of choices for your financial situation. Retirement planning is not a one-size-fits-all, and the most successful plans are ones that are personalized to you. Speaking to a financial advisor can help you decide your best, individualized course of action.
Types of Retirement Plans
There are numerous options when it comes to retirement plans, but here are some of the most popular versions that might interest you:
This plan allows individuals to contribute some of their pre-tax paychecks to tax-deferred investments, reducing the amount of taxes on the income they would need to pay that year. The assets will grow tax-deferred until they are withdrawn during retirement. It is typically distributed as an employee benefit, so it is important to speak with your employer to determine what plans they have to offer.
Individual Retirement Account (IRA)This is a tax-favored account, meaning that it is either subject to tax-free growth or tax-deferral. Once the money is withdrawn, the funds will be taxed, but the individual can rest assured knowing they will not be taxed until then.
Roth (IRA)With this option, contributions are made with after-tax dollars, but once you begin generating money within the IRA, those dollars are never taxed again. This option also lets you withdraw contributions before retirement without penalty, so long as it has been five years since your first contribution.
What We Can Do
Choosing between these various options requires analyzing your current income status, your goal income during retirement, present, and future spending patterns, and your individual quality of life requirements during your older years. This means that planning for retirement might not always be an easy process. The key to a comfortable retirement is sifting through all of this information and doing it accurately. The good news is that retirement planners can help keep you on track. Wright Choice Financial Group has advisors specializing in financial strategies, with retirement planners who will analyze your past and present financial situations to develop your personalized retirement plan. Delay retirement planning any longer because you feel overwhelmed by the process is the first mistake. Instead, see how a retirement planner can help you feel more comfortable now so that you can be more comfortable in your post-employment years.
The best time to begin planning for retirement is now. Sifting through retirement options, the details of your finances, and determining how best to merge the two takes a lot of strategizing. Many people choose to put it off simply because the thought of doing so is daunting, or the idea of retirement seems too distant for present-day consideration. However, delaying retirement planning will only lead to lost time, lost earnings, and lost wealth. Rather than feel overwhelmed or miss out on time spent expanding your savings, speak with a local retirement planner. Through financial review and personalized planning, we can help make retirement as stress-free as possible, even before it has begun.