There’s no fixed age for you to start saving for retirement; the sooner, the better. It is imperative that you save enough money for your retirement so that you wouldn’t have to rely solely on Social Security benefits. Your retirement savings should be enough to take care of your and your spouse’s needs without depleting it before its preordained time. The truth is you can never calculate the exact amount of money you need to lead a comfortable life post-retirement, but you can at least arrive at an interim amount needed for your retirement.
To calculate the amount of money you need to save for retirement, you can use the free retirement calculators on the Internet. However, before you decide to use the retirement calculator, you need to consider certain other vital factors that determine how much money you will be saving for retirement, which are as follows:
Current savings
Your current savings play a major role in determining the amount of money you will be saving for retirement. If you haven’t taken your retirement savings seriously, and not saving for retirement diligently, then you will face undesirable consequences in your retirement days. According to financial experts, you will need about 70% of your current income in order to maintain your standard of living post-retirement.
Inflation
Before you start saving for retirement, there’s another crucial factor you need to considerinflation. It has been one of the major concerns of retirees since it leads to an increase in the amount of money to be saved for retirement. Retirement isn’t simply for a year or two, it spans out to several decades; thus, it is imperative that you take the possibility of inflation into account while saving for retirement since it will help you maintain your purchasing power in the face of such adversities.
Risk tolerance
Saving for your retirement will involve making sound investments that will yield benefits in your retirement days. Investments often test your ability to withstand any risks since the market is quite volatile, but this isn’t a serious situation if you still have forty years to retirement. However, if you are considering investing when you are nearing retirement, it is imperative that preserving your capital is your biggest priority since your risk tolerance will be quite low.
Taxes
Taxes won’t leave you alone even in your retirement; you still have to pay taxes as per your income sources. So, when you are saving for retirement, ensure that you acknowledge the fact that your taxes will be definitely eating into your retirement savings. However, you are excluded from paying taxes in your retirement if you depend solely on your Social Security benefits, but this isn’t a feasible thing to do.
Before you determine the amount of money you will be saving for retirement, consider the above-mentioned factors since they influence your retirement savings.
Irrespective of what you earned in your hay day, you need to save for your retirement years. Simply relying on your Social Security benefit isn’t a wise choice; it is imperative that you save enough money for your retirement when you are earning. The golden rule of saving for retirement is that you have to start as early as you can. Apart from this, there are certain practical ways that will help you save money for your twilight years. To ensure that you lead a comfortable life post-retirement, here are certain effective tips that will help you in your endeavor of saving for retirement.
Start today
Irrespective of whether you adhered to the golden rule, it’s never too late to start saving for retirement. So, here’s what you can dostart today. Ensure that you start saving money for retirement, make sound investments, and understand the power of compound interest. The sooner you invest money, the higher the benefits you obtain from it.
Contribute to the 401(k)
Most employers provide the traditional 401(k) plan, and if your employer adheres to this practice, it is advisable that you opt for it. The 401(k) plan allows you to contribute your pre-tax money to the plan, and this is indeed a major advantage for you since you are saving for your retirement. You need to consider what your tax bracket will be post-retirement while contributing to the 401(k) plan, especially if your employer offers Roth 401(k) since it makes use of income after taxes rather than pre-tax funds.
Open an IRA
To ensure that you have sufficient money for retirement in your reserve, you can consider establishing an individual retirement account (IRA) which will give an impetus to your retirement savings. You can choose the traditional IRA that depends on your income and is tax deductible. This provides you with the perfect opportunity to watch your investment investments grow tax-deferred until you finally make a withdrawal during your retirement. The second option is to opt for Roth IRAs that are funded with your after-tax contributions, and once you turn fifty-nine and a half years old, your earnings and qualified withdrawals become federal tax free.
Meet the employer’s match
If your employer is willing to match your 401(k) plan, it will work in your favor to match the employer’s contribution. For instance, if your employer offers to match 50% of the employee contribution up to 5% of your salary, this means that you can earn around $50,000 in a year, and contribute $2,500 to your retirement plan. In addition to this, the employer will be contributing $1,250, and this money is earned without you having to work for it. So, meet your employer’s match and don’t leave this opportunity to add to your retirement savings.
Every individual saves for a comfortable retirement life. In order to enjoy a stress-free retirement period, it is important to invest at an early stage and plan your retirement to make the right investment decisions. Consider your current financial condition and set your retirement goal; based on the same, you may make investment decisions that will allow you to grow your wealth. Roth IRA accounts are highly preferred by investors due to the taxation benefit. Consider these investment plans during your retirement planning. When you withdraw the amount at the time of your retirement, you will not have to pay any tax on the same. There are a number of funds you can choose to invest in. Carry out a market research or consult the portfolio manager to make a well-informed decision. We have listed out the top five Roth IRA funds for investment during retirement planning in 2018.
Consider the prevailing retirement annuity rates and weigh your options when making an investment decision during the retirement planning. Determine the amount you want to receive at the time of your retirement, consider your current financial position, and make your investment decisions accordingly.
One of the best investment moves you can make is to open a Roth IRA account when you are planning your retirement. It is a legal tax shelter and you will contribute money that has already been taxed. Hence, you will not be taxed again when you withdraw the amount. The interest earned on it is tax-free as well. You only need to keep the money in the account for a certain period of time and upon your retirement, you can withdraw the money, which goes straight to your pocket without any deductions.
Top Roth IRA funds for 2018
It is easy to open an account and invest in the IRA fund. Choosing the fund can be a little difficult. However, there are a number of options that will help you maximize your wealth.
Investors need to have knowledge about the retirement annuity rates when making an investment decision during retirement planning. In order to generate higher wealth in the long run, it is important to start saving and investing at an early stage.
Surviving in today’s competitive market is challenging. But what’s even more challenging is to earn enough to make ends meet and then have some left for your retirement. In fact, some say that you should start planning and saving up the minute you start working for that nice safety nest egg if you want to sip margaritas in the Bahamas sitting by the ocean! This is why understanding these seven basic facts will help you understand your financial situation better and help save up as part of your retirement investing strategies.
Assess the numbers: The number of zeroes is more important in this equation. You should know how much you will need during your retirement to live comfortably, based on which the size of your investment portfolio can be assessed. The earlier you start investing, the better will be your return on investments in the long run.
Cost of living: Don’t spend more than what is needed or simply don’t spend more than what is required. This will help regulate your cash flow and expenditure to meet all your necessities, pay your dues and have enough left to start investing in various options.
Stay clear of debt: With debt, comes the interest component. Higher the amount you owe, the more interest you will end up paying. Clear off all your debts and steer clear of any future debts. Control your credit card spending. Credit card debt is the biggest burden people in this country face which also takes a huge chunk out of your pocket.
Invest wisely in real estate: If you are a family of three or four, don’t end up buying a mansion! This is just an expression, however, don’t spend more than what you need on real estate. Asses your living habits and the number of people before making this commitment as part of your retirement investing strategies.
Look for alternative sources of income: You might be swamped with your existing workload, but a few odd part-time jobs here and there will help you save faster and retire early as part of your retirement investing strategies. The internet is trending with work from home options for you and your family members, which pays decent remuneration also.
Save more: After meeting your dues, your goal is to save a significant percentage of your income annually and maintain that consistency as part of your retirement investing strategies. If you plan to retire early, say at the age of forty or forty-five, you’d better start saving more than one-third of whatever you earn in a year.
Never speculate: Never speculate your return on any investment, always calculate the same. Today, there are online retirement calculators available which can help determine your expected retirement calculation to live off that nest egg comfortably.
“Invest in your future” as they rightfully say. Saving for retirement is one of the major concerns in your career. In today’s economy and time of uncertainty, with sky-high prices for even basic necessities, by the time you end up paying all your dues, there will be very little left to retire with. Thus it is imperative to earn and reinvest your earnings after you have met all your obligations to make sure that safety nest egg is ready for you to cash in when you retire.
Here are some of the poplar re-investment opportunities you can follow as part of your retirement investing strategies:
Plan your retirement portfolio: A comprehensive 401K will ensure multiple avenues for investment. However, it is a good idea to construct a total portfolio of stocks and bonds. Granted there is no certainty in the stock market that you will get a good return on your investment. But with time and experience, you will gain the expertise provided you start early and are willing to take a few risks for better returns.
Investment in retirement income funds: Investing in retirement income funds can be profitable as part of your retirement investing strategies. Mutual finds especially are a good option since a diversified portfolio of stocks and bonds are created and managed by the financial institution on your behalf to provide a steady stream of income that will come in handy for retirement.
Annuities: Immediate annuities, in particular, is popular among retirement investing strategies. In exchange for a lumpsum amount, guaranteed income for life is assured by the insurance provider with multiple payout options.
Buy bonds: In buy bonds, you agree to pay a loan amount to any government or corporation who will pay interest on the principal amount for a particular tenure until its maturity after which the principal amount is refunded. Buy bonds are somewhat profitable among multiple retirement investing strategies.
Real estate: It is always a good option to invest in real estate, which can be then rented out for a steady flow of additional income with you only spending on the maintenance of the said property. Real estate income is steady and one of the profitable retirement investment strategies since there is appreciation in the value of the property, which can be then sold for a profit.
There are other avenues for investing for your retirement nest egg. It is, however, a good idea to consult with financial experts who can determine a viable course of action that will ensure a good return on any investment you plan to make. These experts will be able to assess the risks and associated rewards better to offer the best advice for your retirement.
Is your retirement around the corner? Have you chosen the retirement community for yourself? Well, if not, then what are you waiting for? Retirement means a lot of time that you can give to yourself and do the things that you love and spend the rest of your life in peace. Here is the list of perfect retirement communities, divided on a regional basis so that you can choose your area of preference easily.
Arizona
Monte Vista Village Resort
Monte Vista Village Resort is one of the best retirement communities in Mesa, Arizona. It has some refreshing pools and splendid golf courses for the golf lovers and not forgetting the magnificent tennis courts for the lovers of this racquet-sport. It is spread over 80 acres of land.
Sunrise RV Resort
Situated in the warmth and opulence of a desert region, Sunrise RV Resort welcomes recreation lovers with magnificent lakes for fishing and boating, swimming pools, tennis courts and untamed natural beauty of the Sonoran Desert.
California
Palm Springs Oasis Resort
The Palm Springs Oasis Resort is situated in the Coachella Valley. From there, you will get a perfect view of the San Jacinto and the Santa Rosa Mountain ranges. The resort provides its guest retirees with a golf course, spa, two beautiful swimming pools and a tennis court.
Florida
Four Lakes Golf Club
The specialty of the Four Lakes Golf Club among other retirement communities is that it has a waterfront, a premium golf course and exclusive cypress wetlands. It gives you the chance to confront the picturesque beauty of 500 scenic areas. It is situated near Disney and Orlando.
The Meadows and Arbors at CountryWood
Awarded as the Community of the Year by MHI, The Meadows and Arbors at CountryWood proves that it has got something different from the other retirement communities. The houses exhibit the traditional colonial form of architecture. It is located at about 20 miles or even less than that from Tampa. Your stay at this retirement community is sure to be nostalgic.
Illinois
Willow Lake Estates
The Willow Lake Estates is situated on the Fox River. The retirees can enjoy the experience of a private stocked lake with a boat dock. It is a very spacious clubhouse that is located in the Chicago metro area. With a radius of 6 miles, you will get many restaurants that provide mouth-watering food.
New Jersey
Anderson Creek Club
The Anderson Creek Club is spread over 1,700 acres of land. It is a perfect choice for those who are seeking retirement communities in the lap of nature. The Anderson Creek Club is only 90 miles away from the beach and a few hours journey will take you to the mountains.
South Carolina
Hampton Lake
This is one of the most friendly retirement communities that you will ever come across. It has a private freshwater lake that is spread over an area of 182 acres where you can go boating and fishing.
Aging might not always push you to mundane existence. Retirement communities, which have become a trend, can shift the perception. They come in all shapes and sizes and are restricted to an age group of 50 and above to provide suitable amenities. Yes, at that age, one might not have full motor functions or might suffer from chronic conditions like diabetes, but the communities are equipped to provide all the help required for wellness to overcome the challenges easily and live a fuller active life.
Gone are the days when it considered cruel to not take care of an aged parent. With fast-paced lives of the present generation, the parents themselves would rather prefer living in a retirement community with all the right facilities. It’s time they too relax and have some fun as well, by staying close to like-minded people of their age group. Such niche communities are increasingly popular, catering to seniors based on ethnicity, sexual orientation or even hobbies, apart from the regular retirement facilities based only on age as a factor.
Understand the pros and cons
The most important benefit of choosing a retirement community, especially a Continuing Care Retirement Community, is that you will be able to continue living in the same community even as you grow older. You might need more assistance as you age and would be shifted from an independent living facility to an assisted living facility and then to a nursing home type, if you require constant care. They are predominantly set up in places with a cozy weather for the residents to live comfortably. The Villages in Florida, The Atria in New York, Sun City Hilton Head in Bluffton and Laguna Woods Village in California are some of the excellent retirement homes. With growing popularity, the concept of retirement communities has even expanded to cities though it’s expensive. They have a host of indoor and outdoor activities ranging from swimming to golf for the residents to lead an active yet relaxed post-retirement life.
Make an informed decision
This concept makes a retired life sound amazing, right? It really is. One gets to do all that we typically tend to miss during our busy adult lives. As a retiree, you have all the time in hand and the right company to celebrate life with. The key is to start planning well early, so you make the investment while you are still in your prime of life. And your options are wide open in terms of locale, environment, budget, interest and so on. Each of these communities has their own payment terms, and the cost involved might vary hugely just like any other real estate. Factors such as cost of living, safety, economy, and taxes have to be taken into account.
Do your research, shortlist few, pay a visit, experience the setting and see if you would enjoy being there every single day. Once you find a happy place, make the investment confidently and have well-balanced Golden years.
Retire in peace and in style
The full-age retirement chart
A comfortable, secure, and safe retirement is probably the dream of every working individual in the country. Today, with the generation living healthier, longer lives than ever before, it is safe to assume that we will live longer than our grandparents and parents and, consequently, have longer retirement periods as well. Achieving one’s dream of a comfortable, secure retirement becomes easier and simpler when one plans his/her finances.
Full retirement age
There is an important term called as the full retirement age’ in the US. It is the age at which an individual becomes entitled to receive unreduced or full retirement benefits from the employer and government. There are certain rules when it comes to full retirement age (FRA):
If someone has been born after 1937, i.e. if that individual’sFRA is more than 65, that person will still be able to receive his/her entire benefits at age 62. However, the stipulation is that the benefits reduction is more for individuals born after 1938.
For instance, if someone’s FRA is 67.
If one begins his/her retirement benefits at the age of 62 years, then their monthly benefit reduces by as much as 30%. For other ages, the reduction for starting benefits at that particular age is:
6.7% when begun at age 66
13.3% when begun at age 65
20%when begun at age 64, and
25% when begun at age 63
Also, if one begins receiving the benefits of their spouses at the age of 62 years, then the reduction in monthly benefit is a whopping 67.5% of your amount that the spouse would have gotten had their benefits begun at FRA. For the spouses, the reduction percentages for beginning benefits is:
50% when begun at age 67 (maximum benefit)
54.2% when begun at age 66
58.3% when begun at age 65
62.5% when begun at age 64, and
65% when begun at age 63
Full age retirement chart
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The earliest one can begin receiving benefits is at the age of 62 only.
Also, if one was born on the 1st of January, then the year to be considered is the previous year. If one were born on the 1st of any month, then then the previous month age is considered.
Also, if one delays retirement benefits and wait until after the FRA, then one may even be entitled for credits for delayed retirement. These will increase benefits per month. Also, one should sign up for Medicare at 65 years of age.
Tags: Retirement planningfull age retirement chart
Full Social Security Benefits Receipt Ages
Year of Birth
Full Retirement Age
1960 and after
67 years
1959
66 years, 10 months
1958
66 years, 8 months
1957
66 years, 6 months
1956
66 years, 4 months
1955
66 years, 2 months
1943–1954
66 years
1942
65 years, 10 months
1941
65 years, 8 months
1940
65 years, 6 months
1939
65 years, 4 months
1938
65 years, 2 months
1937 or before
65 years
Planning for income to be received after retirement is your responsibility, especially since the traditional employer-funded retirement plans and their popularity is fading. With a high-powered lifestyle and growing needs, Social Security benefits may not be enough to insure a comfortable life after retirement. Without a retirement plan, you could face a future that will be full of financial uncertainties and hardships.
But you can overcome these financial uncertainties and hardships. How? By investing your retirement income in a broad range of assets that can offer not just current income but advance in funds as well.
Strategy to follow to generate regular income
Today, there are many investment methods available, which carry minimal or no risks and are tax efficient too. You can implement an effective and more stable strategy for generating sustainable retirement income in following ways
A good retirement income investment strategy not only focuses on regular income but also makes sure that your money doesn’t erode and grows to beat when the price rises. When you are investing, see if the returns are profitable and if you can easily access the money when required. It is best to consider the risk with respect to longevity, inflation, principal losses from unstable investments, liquidity, or uncertain expenses etc. at the time of planning, so that you accordingly strengthen your investment portfolio.
The retired life is supposed to be the golden era of your life and investment avenues are numerous; the key lies in making yourself aware of those and pick the ones which are the most suitable for you.