Retirement Planning
Many people are facing financial issues that they never before imagined. The future of Social Security is shaky, the Medicare system is being overhauled, and more people have suffered loss through natural devastations in our country then ever before. Now a new generation of baby boomers are facing retirement. It appears that there is tarnish on the golden years as people scratch, struggle, and save to prepare for what lies ahead. Insurance companies are dropping the ball as people look around and wonder whatever happened to the American dream.
The pension plans that many people once relied upon are no longer being offered by many companies but are being replaced by individual retirement accounts and 401 K plans. However, all is not lost. Though the retirement age is beginning to climb, currently, the retirement age for my generation is set at 67 years old, and many people are continuing to work through their retirement years, there are many things that you can do to prepare for and plan for your retirement.
When it comes to planning for retirement two words are key: Savings and Diversification. First, let’s take a look at savings. Many financial advisors recommend that people begin with the basics. When it comes to retirement, a savings account is still a great place to start. It is also recommended that as soon as you enter the work place, you should begin saving. If you just set aside $25.00 from each paycheck and put it into a savings account where it will earn interest (compounding) you will accumulate a nice sized account over thirty-forty years. Many people often overlook the importance of a simple savings account and lose the best benefit that one is given in retirement planning- time. By beginning your savings account while you are young, you will have the advantage of saving over a longer amount of time, compounding and earning interest, and you will be rewarded with a great sum of money to contribute to your nest egg.
Diversification is the next key to enjoying a successful retirement. Since retirement involves a lot of forethought and careful planning for future events, it requires a lot of preparation for things that may or may not happen. Illnesses and medical expenses that may arise could devastate your financial plan so it is important to carefully prepare for any unforeseen illnesses that could affect your financial strategy.
By taking advantage of the “time factor” you can ensure that your retirement savings will have a great chance of providing for all of your needs. One thing is certain however; you should not rely upon Social Security to meet your needs. Your Social Security income should make up about 1/4th of your retirement income; it should not be the sole source of it. By working with a financial planner and an investment counselor, you can use time to invest wisely, save efficiently and take advantage of compounding, to build up a suitable retirement income.
