Tranel Talks Column

3 Tips to Help Your Plan for Your Retirement

To properly plan for your retirement, you need to have a sound financial plan that will see you through your retirement years. Nothing is as scary as running out of money when you’re retired because you may not have the energy to return to the workforce. Worse still, not many employers are enthusiastic about hiring retirees despite 75% of Americans expecting to continue working after retirement. That’s why you need a solid retirement plan. Luckily, there are many resources such as an easy retirement calculator to help you plan for retirement. You can either use the easy retirement calculator or seek the services of retirement planners.

These tips will help you in your retirement planning.

1. Establish How Much You Need to Retire in Comfort

Once you retire, you’ll lose the paycheck that sponsored the lifestyle you are used to. While your domestic expenses may remain the same or slightly decrease, your income will be slashed down significantly. Without a good retirement plan, this lifestyle change may give you retirement anxiety that may eventually do your head in. You can avoid such uncomfortable situations by calculating in advance how much money you’ll require for your retirement.

A good rule of thumb is replacing 70% of your annual pre-retirement income. An easy retirement calculator will help you calculate an exact number that factors economic aspects such as inflation and annual increases in salary. Better still, you can engage the services of retirement planners to help you settle on an amount that will cater to all your expenses in retirement.

2. Work with Wealth Management Advisors

There are many options you can use to plan for your retirement. You can utilize your employer-sponsored 401(k) plan, traditional IRAs, or ROTH IRAs. However, these plans may not be the best fit as you may sometimes have more expenses after retirement. For instance, you may be paying school fees for your child or grandchild in college, or you may still be servicing a mortgage loan. This will require you to have better plans than 401(k) plans or retirement savings in your bank account. This is where a wealth management advisor comes in.

When you engage a wealth management firm to help you plan for retirement, you’ll have more options with better financial outcomes. As financial consultants will tell you, planning for your retirement early will give you better outcomes. Wealth management advisers can help you identify long-term investment vehicles that will generate wealth throughout your employment. These may include options of investing in stocks and bonds or real estate. This way, you’ll not only have enough income for your retirement but also generational wealth to leave to your dependents.

3. Understand Differences in Retirement Savings Accounts

Your wealth management advisor will help analyze which retirement savings account is best for you. Consultants will help you understand the terms and conditions for these different saving plans, so you pick one that is in tune with your current and future financial positions. An advanced easy retirement calculator may also digest some of these factors that come into play.

Roth IRAs and traditional IRA are often the most confusing. The main difference between ROTH and traditional IRAs is when your savings get taxed. For ROTH IRAs, you pay taxes on the money you save in the account during your employment period instead of getting taxed when withdrawing the money in retirement.

On the other hand, traditional IRAs don’t deduct taxes on the money you save into your account when employed. Instead, you pay taxes when withdrawing your money during the retirement period. A 401(k) is an employer-issued retirement savings account. With a 401(k), your savings are deducted from your paycheck directly. Your employer may then match a certain percentage of your savings. These are the factors that your financial consultant will help you review when selecting your ideal retirement savings account. For all of your financial counseling needs, contact our team at Tranel Financial Group.