Retirement Planning

    For most people saving for retirement is hard to understand, especially during their working years. The earlier you start saving for retirement on your own the better off you will be when you actually decide to retire. The Social Security systems future is uncertain and your works pension plans could be under-funded or even go bankrupt. Experts say that most people can expect to spend at least twenty years in retirement.

    Most people living expenses go done by the time they reach retirement, but this is not always the case. And by the time most people retire, their youngest child has completed college, but this does not mean that it has been paid for completely. In fact, some people end up taking out mortgages on their houses, home equity loans or many other types of loans and by the time their child has completed college they are still paying it off. It is still hard for the people who retire without any of this type of debt. The price of daily living can go since more time is spent at home, plus any vacations or hobbies. You should estimate that you will need between 70% and 100% of your current salary to live comfortably during retirement.

    To be able to do this most people turn retirement plans such as 401k which will allow you to put aside a portion of your salary into an account that can then be invested into a wide variety of instruments. In 2005, Workers under 50 could contribute up to $14,000 a year and people over 50 could contribute $18,000. Also some employers match the amount which causes your savings to grow even faster.

    Some employers don’t offer a 401k plan, in which case you can open up a Individual Retirement Account (IRA). With this at 50 and under you can set aside up to $4,000 a year while workers over the age of 50 can put $4,500 away. The money put up can be deducted from your taxes and stay tax-deferred until it has been withdrawn. And depending on where you open it you might can invest this money as well. It also can be helpful to meet with a financial planner to help to meet to savings goal. A financial planner can help you decide the best program to put your savings in and also can help pick a suitable place to invest it, if that is your desire. Make sure you interview several financial planners and make sure the one you pick your best interest in mind.