EDITOR’S NOTE: If you’re in your mid-50s and older, retirement is a popular topic, at least among my friends. We’re already retired, thinking about it, or wondering how much longer to keep working.
One thing I’ve found: retirement isn’t a one-size-fits-all. Each of our couples’ friends has a different plan for their retirement. One wants to spend part of the year in another country to be closer to their grown son. Another is trying out Florida for the near future. And several are still working but aren’t sure where they want to eventually land.
I found this interesting article from a financial planning company called Securian Financial. Here are a few of their tips for preparing for retirement. You can read more on their website.
An important step to gearing up for retirement is figuring out all your sources of income. And being realistic. Here’s a checklist of things to consider when preparing for retirement:
- The current mix of investments in your portfolio
- Your current assets
- Your anticipated future assets vs. income
- When you want to start receiving Social Security
- How you’ll pay for health care costs
- The tax impact of drawing down your assets over time.
Ways to Increase Your Retirement Savings
Even though retirement is right around the corner, it’s never too late to save, save, save! Continue to increase your savings, to contribute at least 15 percent, or more, of your earnings.
- If you own a home, try to pay off your mortgage before you retire.
- Don’t take money out of your retirement savings to pay for your children’s education.
- Pay attention to the amount of debt you take on and pay it off before retirement.
- Review your current life insurance coverage — do you need more?
- Invest the maximum amount in your employer-sponsored 401(k), as this will likely fund a big part of your retirement. These plans typically allow you to save on a pre-tax basis while your assets grow tax-deferred. Income taxes are due when you begin taking withdrawals.
- Consider a Roth or traditional IRA to invest above the amount allowed in your retirement plan.
- Review your diversification. And know your risk tolerance. Diversification does not prevent loss, but it is a method used to manage risk.
Calculating Your Retirement Income Needs
How much income do you need? Typically, you’ll want to save about 75-85 percent of your pre-retirement income. Since it’s hard to predict your spending, add 5-10 percentage points to that just to be safe.
