How to Get on Track for Retirement

Plan early to stop working at a young age.

Regrettably, some adults don't plan for retirement or put retirement planning off until the last minute. Poor planning might delay retirement or prevent some people from retiring altogether. The earlier an adult starts planning, the sooner he can stop working. But, even a late planner can get on track for retirement and possibly leave work while still relatively young and healthy.

Instructions

1. Save more to create liquid cash. Begin depositing a percentage of your earnings as soon as your start working. Start with a modest deposit, perhaps 10 percent of pay. Gradually increase as your income allows. Save $5,000 a year and you'll have about $100,000 in 20 years.

2. Discuss retirement options with your employer. Get information on how to start contributing to your employer's retirement savings plan (401K). Some companies also have pension plans, which are funds available to employees upon retirement.

3. Pay cash and don't accumulate debt. Owing thousands of dollars in your later years might defer retirement as you struggle to pay down debts. Keep debts to a minimum throughout the years to avoid this issue. If currently carrying excessive debts, stop spending and develop a plan to remedy these bills by paying more than the minimum, destroying credit cards and negotiating lower rates.

4. Get rid of your mortgage loan. A house payment can complicate your retirement years. Check your finances to see if you can switch to bi-weekly mortgage payments to help reduce how much interest you pay and to pay off the loan sooner. Alternatively, consider refinancing to a 15-year mortgage to satisfy the mortgage debt in less time.

5. Start your own retirement plan. In addition to contributions made to an employer retirement plan or pension plan, open your own Individual Retirement Plan or IRA for additional funds during your retirement years. Discuss opening this type of account with any bank or insurance company in your local area. Other options for long-term cash include opening a Certificate of Deposit or Money Market Account.

6. Keep hands off your savings. Dipping into your savings depletes how much you'll have during your retirement years. Only use retirement money during an emergency, and resolve to pay back any funds taken from these accounts.

Tips & Warnings

• Talk to a life insurance agent about increasing or purchasing additional life insurance coverage. If one spouse dies, funds from the insurance policy helps sustain the surviving spouse.

References

• U.S. Department of Labor: Top 10 Ways to Prepare for Retirement
• Family Circle; Help Your Parents Plan for Retirement; Pamela Kramer