How To Save For Retirement?

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How To Save For Retirement - A Long Term Plan
Unlike a rainy day fund set aside to cope with an unforeseeable event, such as job loss, illness, or economic downturn, a retirement fund is a long term account for your use and hopefully enjoyment when you retire. It is a separate account dedicated to supplement your social security benefits (if you are entitled to them) or it can be an entire retirement plan designed for your goals and future. The importance of having a sound plan for how much money you will need to live on in your golden years cannot be stressed enough. A soundly designed and well administered retirement plan can allow you to retire more comfortably than just winging it. Let’s talk about how to save for retirement.
You’re Retirement Goals - Start Saving Early
One of the early lessons children are usually taught is how to start saving. Someone, usually a parent or grandparent, takes the child to the local bank with their piggy bank to open a savings account.  While pennies in a piggy bank may not be a big start on how to save for retirement, the seed is planted. We learn early and know it is important to create a nest egg for “a rainy day” or that long awaited retirement age. Increasingly, though, people do not start to save early and find themselves challenged as 50 or older approaches. Take advantage now while time is on your side and cultivate the habit and start saving now. Your retirement savings habit will reward you. 
Multigenerational family opening a gift together
Age 50+ and Retirement Planning
Before age 50, many people with a higher risk tolerance are investing to grow, so they can establish a larger, broader nest egg for when they retire. At 50 or older, every year you might become more conservative with your investments, and things, like income tax and how much money you can afford to spend each year, can become pressing concerns. Pre-tax becomes much more enticing for investments instead of paying taxes. As the target date for your retirement becomes a reality, you want to know where you stand. Health care concerns might become a higher priority than previous concerns, like a big vacation. Life changes, and so do your investment priorities. 
Objective Advice on How to Save For Retirement
At any stage of life, having a good financial planner is important for making solid, informed decisions about the direction your retirement accounts should take. When you are looking to start investing in a retirement account, a professional who can advise you about the differences between individual retirement accounts, employer sponsored retirement plans, and even how much you need to save based on your current income and lifestyle is invaluable. When you start saving early, you can save the worry and strain of trying to make up what is needed for an adequate retirement account amount for use later in life. If you already have investments and are looking for someone who speaks your language and cares about their customers (where you are not just an account number), a CFP® professional can become a strong team member working for you to provide educated insights into investment account strategies and even tax deferred, tax advantaged, or even tax free investment opportunities for your review. 
401 (k), 403 (b), Roth IRA –I Need a Financial Advisor
As you grow your career and invest a larger percentage of your income into your retirement account, things like when taxes come out and the rates that apply become more important. There are many vehicles in which to invest, including  401(k), 403(b), and Roth IRA accounts. Each has its advantages and regulations, and all have contribution limits set by the government that generally increase when a certain age threshold is met to provide opportunity for “catch up” contributions.  It can be tough to understand the complex world of taxes, investment strategy, financial and estate planning and accounting well enough to make the decisions necessary to set up a solid retirement plan. Pre-tax, tax-free, mutual funds, ETFs, and how social security benefits are determined by age, relationship, and net worth, are examples of what is on the table when planning for retirement. A CFP® professional can guide you through the various segments of planning for retirement. 
Take Advantage of Free Money
Many 401(k) plans come with employer offers for matching contributions up to a set percentage. All plans have certain vesting requirements, i.e., you are entitled to company contributions once you have worked for the company for ‘x’ number of years. Some plans automatically enroll participants, while others require participants to enroll themselves. There are two big advantages of these plans. First, they are contributed out of pre-tax dollars. Second, the employer contribution is basically “free money”. Taking advantage of a traditional 401(k) employer match can add up to substantial amounts of additional funds in your retirement account over a period of time. If you have older 401(k) or 403(b) plans from past employment, most often they can be rolled over to a new plan or to an IRA with your current financial advisor without penalty.
Isn’t Retirement What Social Security Is Meant For? Not Really
There are many rules of thumb for retirement planning, but usually it is better to design a plan that is customized and personalized for your unique situation.  There are many factors on how to plan for retirement, ranging from your available resources (salary, assets, employer offers for matching contributions) to lifestyle, family, and age factors. If you live simply, your retirement accounts might not need to be as high in value as someone with a more expensive lifestyle, since “downsizing” on expenditures can be daunting to say the least. If you live simply, your risk tolerance (how much you are willing to risk to take chances for higher returns) may be either lower or higher. For instance, if you are not living on your investment accounts, then you might want to take more risk with them. If you are living on your retirement accounts, then less risk is probably warranted. 
One thing is for certain, though – social security in most instances does not and will not meet the needs of increasing health care costs, medical expenses and home or assisted care needs that escalate as we age.  When you add to this the rising living expenses affected by inflation and the economy, crunching the numbers can be difficult. Social security benefits most will not serve the average person if they desire to help a grandchild with college expenses or suddenly find a spouse needing specialized help or health care. Planning ahead – well ahead – can ease those burdens. Find a financial advisor who will work with you to craft a retirement plan designed to meet your retirement goals.
Also interested in financial planning? Find out here why is financial planning important.
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