How to Prepare a Retirement Plan
For young workers just entering the workforce, retirement can seem a million years away. However, those retirement years have a way to sneaking up on you. If you are not careful, you could find yourself at the end of your career with little retirement savings to see you through. Taking the time to create a detailed retirement blueprint will help you get on track and stay on track, whether you are just out of school or already dreaming of a comfortable retirement.
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Instructions
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Access the benefits estimator on the Social Security website (see Resources) and input your information if you do not have the projected benefits data the Social Security Administration (SSA) sends annually.
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Contact the benefits office or human resources department at your office to determine your eligibility for pension benefits upon retirement. Include the amount of those benefits in your retirement planning.
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Prepare a household budget, if you have not already done so. Having a comprehensive family budget and living within its constraints is important.
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Create a retirement budget. Adjust your income to reflect all guaranteed sources of income, including any pension payments you are eligible for and the estimate of your Social Security benefits. Estimate your retirement expenses as well, understanding that some expenses may rise in retirement, while others may fall.
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Compare the amount of guaranteed income you expect to have in retirement to what you expect to need to meet expenses. You will need to generate enough income from your retirement portfolio to make up for this shortfall. Keep in mind that experts recommend withdrawing no more than four percent of your nest egg in retirement to avoid running out of money.
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Review the retirement savings programs you have available, both at work and away from work. At work you might have access to a 401(k), 403(b) or 457(b) plan. Beyond those programs, you can contribute to a traditional or Roth IRA. When you do invest, be sure to check your earnings and gauge how you are doing toward your retirement goal.
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References
Resources
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