Reorder Your Checks

Retirement Planning Check List


With the uncertain future of government programs like Social Security and the increasingly common collapse of privately funded pension plans, the days of trusting someone else to be responsible for your retirement are over. In fact, the earlier you start planning for retirement, the better off you'll be. Opening a retirement account at the beginning of your career means that your money will have more time to develop and mature. This opportunity for your money to grow is especially important when you consider that you will likely spend between 20 and 30 years in retirement. Whether you're in the first years of working, the middle of your career, or nearing your last day on the job, today is the day that you need to take control of your retirement plans.

Identifying the right retirement plan for you is almost completely dependent on your age. If you are new to the workforce (16-25 years old), then your needs will likely be different from those who are in the midst of their careers (26-55 years old) and those who are nearing retirement (55+ years). If you are 16-25 years old and a member of the beginning workforce, then your best plan of action is to enroll in your company's 401(k) program. The earlier you start contributing to this account, the more financially secure you'll be in retirement. If you are 26-55 years old, then hopefully you already have a 401(k) account established. If not, then do that immediately. Contribute as much as you can afford. Around this time in most people's lives, their role in a family changes; it's likely that you have kids and/or aging parents to take care of. Resist the urge to dip into your retirement funds to pay for other folks' needs. The best thing you can do for your family is to make sure of your own financial stability. Remember: there are scholarships for kids, but no scholarships for retirees.

If you are 55+ years old and nearing retirement but have yet to really plan for life after employment, then you need to establish a retirement target. Exactly how much money will you need in order to maintain your current lifestyle? Research suggests that most retirees will bring in roughly 45% of the employment income after they retire, but will resist downsizing or decreasing bills. Be realistic about your needs, so that you can plan accordingly. In fact, consider working with a professional in order to maximize your current income.

As you work to create and follow your retirement plan, there are a few terms and ideas that you'll need to know. Firstly, a 401(k) plan is a company-sponsored retirement account that many employers provide for their employees. Enrolling in a 401(k) plan is wise because the money is withdrawn from your check before taxes are taken out and, in some instances, companies offer matching dollars. You decide where your 401(k) money is invested so that you can get the greatest return. If you are in your late teens or twenties, then you can be riskier with your 401(k) investments. If you are nearing retirement, though, then you will want to consider pursuing safer investments. If your company doesn't offer a 401(k) plan, then you can enroll in an individual retirement account, or IRA. An IRA serves the same function as a 401(k), but is more commonly used by those who are self-employed or who have reached the limit on their 401(k).

Retirement Education Help and Resources