Tens of millions of Americans received some very bad news within the past year: their retirement plans were likely to be altered, in some cases drastically so. No, I’m not talking about the thousands of people who lost their life savings when con artist Bernie Madoff made off with their money, as bad as that was. Rather, I’m talking about all those people whose retirement funds were decimated when the economy collapsed last September.
As bad as things were, a recently surging stock market has meant that many retirees and soon to be retirees managed to recoup some of their losses, but only if they didn’t panic and sell their stock when things were at their worst. For everyone else, keeping your retirement planning on track is imperative if you’re to have the funds you need for your old age.
Let’s take a look at seven ways you can prepare for your retirement right now:
1. Assess Your Needs – Before you get started, what will your needs be when you retire? Where are you planning to live? What sort of leisure activities do you have planned? Will health issues require you to set aside large sums of money? Consider how you will live when you’re no longer drawing a salary, estimating how long you will live. If people in your family usually live well into their eighties, will you have enough funds set aside for what could be a very lengthy retirement?
2. Contribute To Your Employer’s Plan – Many businesses have 401(k) and similar retirement accounts, some offering an employer match if you make contributions to the fund. For the most part, such plans have replaced the traditional employer funded plan which means that your financial destiny is under your control. If possible, set aside the maximum amount of money each year to achieve your goals faster. Remember: monies set aside are not taxed.
3. Check Your Social Security Benefits – No one can say for certain how much Social Security will pay you when you’re eligible to receive benefits, but you’ll probably get something on a monthly basis. Each year, the Social Security Administration sends out a statement showing what you have earned and what you can expect to receive each month. Make sure that the report accurately reflects your earnings; visit socialsecurity.gov for more information.
4. Start An Individual Retirement Account (IRA) – You can realize additional tax advantages now by saving money through an IRA. This is an excellent option for older Americans whose children are grown and are in need of setting aside more money in a hurry. Also, younger Americans can benefit if they start early, racking up big savings down through the years.
5. Stay The Course – Once you start a savings plan, make it your priority to keep that plan in place. Steady contributions over a long period of time can help you reach your goals. Stopping your savings can set you back, perhaps making it impossible for you to catch up.
6. Don’t Touch Your Savings – What if you lose your job? Should you tap your retirement savings at any point? Avoid this step, if possible. You’ll not only lose some of your retirement funds, but you’ll also face tax penalties for early withdrawals. Find some other ways to get the funds you need.
7. Refine as Needed – How often do you look at your retirement statements? Many Americans are going through the painful review process right now to see where they’ve lost money. Check with your financial advisor for ways to help you get back on track. Understand your statements, your plans and where you are headed. Make changes, if necessary.
As with any planning in life, setting realistic goals is the first step toward achieving them. Meet with a financial planner to help map out a retirement savings plan that is right for you. Finally, watch out for the next Bernie Madoff character who may be looking to “free” you of your retirement savings.
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