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
- Social Security Calculator. The U.S. Social Security Administration will provide you with an estimate of how much social security you'll be entitled to receive once you retire.
- Retirement Calculator. Kiplinger has a user-friendly online calculator that you can use to determine your target retirement amount.
- Retirement Investment Calculator. Use the Financial Industry Regulatory Authority's retirement calculator to determine how your retirement account might grow over the years.
- Retirement Income Calculator. The American Institute of CPA's has a handy calculator that will determine how far your retirement your savings will go per month.
- Life Expectancy Calculator. The University of Pennsylvania offers a formula for figuring out how long you'll likely live in retirement.
- Federal Ballpark Estimate. The Office of Personnel Management helps you estimate how much you should save to ensure a comfortable retirement.
- Issues for Retiring Women. Women are more likely to have less money set aside for retirement than their male counterparts. This AARP article discusses some strategies for female retirees to consider.
- What Women Need to Know (PDF). WiserWomen.org looks at issues pertinent to women approaching retirement and offers solutions to common struggles.
- Women and Retiring. The Department of Labor provides a helpful overview of concerns and support available to women who are considering retirement.
- Every Woman Needs a Retirement Strategy (PDF). The Transamerica Center for Retirement Studies publishes an annual report on issues facing women retirees. Follow the link to their thoughts on 2012.
- Big Cash for Teens. Michigan State University offers some tips for helping teens get ready for retirement.
- Can Teens Contribute to 401(k) Plans? The University of California at Davis answers this and other financial questions for beginning workers.
- Investing Over Time. The USAA Educational Foundation shows how much your money can grow over the next several years.
- Reverse Mortgage. If you are nearing retirement, then a reverse mortgage is an option for you to consider. Genworth provides some relevant information on your choices and possible outcomes.
- Effectiveness of Online Retirement Tools. The Society of Actuaries put together an extensive report on the effectiveness of various online retirement planning tools.
- 401(k) Versus IRA. BetterTrades looks at the differences between these two types of common retirement accounts.
- Generation Gap in Retirement Planning. The Society for Human Resources Management takes an interesting look at how different generations are likely to plan for retirement.
- Loss of Employment. What happens to your retirement account if you lose your job? The Pension Benefit Guaranty Corporation has some helpful information for you to consider in this increasingly common situation.
- Roadmap to Saving. The Securities and Exchange Commission lays out a thoughtful roadmap for making the most of your retirement account investments.
- National Retirement Risk Index. The National Retirement Risk Index (NRRI) is used to measure the percentage of households that are in danger of not being able to maintain their standard of living after retiring.
- Understanding Retirement Plan Fees. Most, if not all, retirement plans have fees associated with them. Find out what those fees are at this resource.
- Retirement Plan Benefit Estimator. Use this calculator to determine benefit amounts.
- Planning for Retirement. This selection of important resources can help assist individuals with retirement planning.
- Expected Retirement Date Accuracy. This resource provides valuable information to individuals planning for retirement in regards to the role of health shocks and expected retirement dates.
- Tax Information for Retirement Plans. Guides and help on tax information for retirement plans made available by the IRS.
- Ultimate Guide to Retirement. If you are searching for help planning for retirement, review this resource by CNN money.
- Self Help Guide to Pre-Retirement Planning. This page provides a selection of retirement resources including a checklist.