Plan Your Retirement

6 steps to assure financial security in the golden years

It’s never too early to think about your financial future, and my goal is to help you create financial security for the years to come—however you envision your lifestyle. Of course, to live the lifestyle you envision, you must be able to afford it. The big question is, how do you get there?

To plan for your financial future, you will need information. So plan to use common sense, do some research and consult with knowledgeable advisers. Your advisers can tell you if your expectations are reasonable and then steer you in the right direction so you reach your retirement goals. Here are six steps to put you in control of your financial future:

1 Determine your ideal future lifestyle. Create a mental image of how you want to live when you are no longer working full-time, and answer the following: Do you plan to fully retire or work part-time? Will part-time work be in your current field or an area you are interested in but haven’t had time to pursue? What will that future lifestyle cost? Create a budget and factor in inflation— an increase in costs and expenses based on the rate of growth in prices. (While inflation is minimal now, you might want to increase amounts by one to five percent to be sure you have enough to meet your expectations.) Will you be sharing your lifestyle with anyone? If so, will that person contribute financially? Where do you want to live, and in what type of housing (town house, own your home, apartment, senior community)? What activities do you want to participate in? What will they cost? Who else (people or charities) must you provide for, and when?

2 Assess your current financial situation and create a budget by doing the following: Tally your current assets (those that are available for spending) such as cash, checking accounts, securities and salable assets. You may be planning to sell items collected or acquired such as art, jewelry and real estate. Determine when your assets will be liquid or “spendable.” Do a statistical projection at a moderate rate of interest to see what those assets will actually be worth at the time you plan to use them. Get a statistical calculator to calculate these figures on your own. HP and TI are popular brands. My calculator of choice is the HP 12c. Compare these figures with your future financial needs from step 1 to see if there is a difference.

3 Evaluate if the “difference” you need is reasonable and attainable. Creating an unrealistic goal is a surefire way not to reach your goal. If your goal is unrealistic, rethink it.

4 Research your options. You can go this alone. After all, the Internet is a wonderful tool with tons of information at your fingertips. I have found, however, that uninformed research yields incorrect conclusions. The first source I suggest you turn to is your accountant. Query his or her knowledge of retirement planning. If your accountant is not an expert in this area, ask him or her to recommend consultants who specialize in retirement planning.

5 Determine where your funds to retire on will come from: your current savings account new savings Social Security your employer’s retirement plan inheritance other Plan for how and when you will put aside those monies. Research the applicable rules and the account and fund expenses. It makes sense to evaluate the tax-deferred distribution options along with the tax-preferential distribution options.

6 Create a plan and stick to it. Retirement savings must be methodical and ongoing. You will need to continually evaluate the program you select— monitoring the laws of a plan and the investments chosen in coordination with your investment tolerance. These six steps are indeed a project, but one well worth doing. They will yield an education and an orderly way to develop your retirement plan, and the financial wherewithal to live your dream.

Elise Feldman is a certified pension consultant, president of Feldman Benefit Services Inc. in Springfield. This article was adapted from Jersey Women Mean Business: Big Bold Business™ Advice from New Jersey Women Business Owners, edited by Joyce Restaino and published by Woodpecker Press, Bayville, N.J.

Related Read: Investing in Future Care

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