The 5 Basic Steps of Retirement Planning

April 18, 2023

Retirement planning is essential to determine whether you will have enough finances to retire without complications. One of the most crucial long-term planning considerations is your savings for retirement. Many people dismiss the idea as something that can wait, but being proactive about your future financial plans is essential.

Retirement Planning and What You Must Know

Taking these steps now can help make your later years easier. If you still need to figure out where to start, here are five basic steps to help you with your plan.

Know When You Should Start Planning for Retirement

A common mistake when planning to retire is failing to plan soon enough. You might believe you have plenty of time to think about it, but it is never too soon. The sooner you start saving, the more your savings can grow. It helps ensure a financially stable future where you can relax and enjoy your older years.

Decide How Much Money You Need

Before finalizing your retirement planning, consider how much money you need. Most recommendations suggest anywhere from 55% to 80% of your current annual income for those years you are saving for. Consider how many years you need to save for calculating your total savings needs.

The younger you are, the less you might need to contribute each year. Consider how many more working years you have as you calculate your savings contribution. Contribute more if you are older to be more aggressive about protecting your lifestyle.

Assess Your Current Financial Goals

Regarding your retirement savings, the financial burden of that process can affect your current financial goals. Are you trying to pay off credit card debts or any other loans? Assess your available income and prioritize your payments so that you have money available for your long-term investment funds. Securing your financial future is as significant as paying down outstanding debts.

Select the Plan That Fits Your Retirement Strategy

Your future plans will dictate the correct type of fund for your situation. Elect to participate if you have access to a 401k through your employer, mainly if it includes an employer match to your contributions. Even if this fund doesn’t meet all your needs, the employer match is beneficial as additional funds you do not have to contribute yourself.

Consider personal retirement accounts as well. Personal accounts may have contribution limits, but they also include some tax advantages and can provide an extra savings fund to help meet your financial obligations later.

Choose the Right Retirement Investment Strategy

Your investment strategy determines how aggressively you want your money invested. Are you comfortable with taking more significant risks for the chance of a bigger reward? Younger adults can often afford to be more aggressive, while it is essential to transition to more conservative options.

Planning for retirement can be easier than you think. These five steps provide you with simplified retirement planning considerations. Consider these elements as you build the plan to meet your needs once you retire.

About 1891 Financial Life

At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.

Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.