10 Ways to Plan Your Retirement

This post was inspired by Genworth Financial. All opinions expressed in this post are 100% mine. For more information about long-term care, visit the Genworth Financial website.

As a work-at-home mom, I think about paying the rent, the utilities, and putting food on the table.  I have to be honest and admit that I don’t think a whole lot about retirement planning. After typing that sentence, I immediately realize that Frank and I need to get on the ball and start planning for retirement!  I read an article and learned about are 10 simple ways that you and I can start planning for retirement. It is also advised to start planning your estate early with the help of an estate planning attorney. A Will Planning Lawyer will help you draft your will and other legal documents.

1 – Save as much as you can as early as you can.

Don’t think it’s ever too late to start saving, because it never is.  However, the sooner you begin saving, the more time your money has to grow.  Gains each year build on the prior year’s – this is the power of compounding and the best way to accumulate wealth.

2 – Set realistic goals.

When planning your retirement expenses, base them on your needs rather than rules of thumb.  Be honest about how you will want to live in retirement and how much it will cost.  Then calculate how much you need to save for retirement to supplement your Social Security and other sources of retirement income.

3 – A 401(k) is one of the easiest and best ways to save for retirement.

By contributing money to a 401(k), you get an immediate tax deduction, tax-deferred growth on your savings, and – usually – a matching contribution from your company.

4 – An IRA also can give your savings a tax-advantaged boost.

Just like a 401(k), IRAs can offer huge tax breaks!  There are two types of IRAs: (1) a traditional IRA that offers tax-deferred growth, which means you will pay taxes on your investment gains only when you make withdrawals, and if you qualify, your contributions may be deductible; or (2) a Roth IRA, which doesn’t allow for deductible contributions but does offer tax-free growth, which means that you owe no tax when you make withdrawals.

5 – Focus on your asset allocation more than on individual picks. 

Your long-term returns will be greatly affected by how you divide your portfolio between stocks and bonds.

6 – Stocks are best for long-term growth.

Stocks have the best chance of achieving high returns over long periods of time.  With a healthy dose, you can ensure that your savings will grow faster than inflation, increasing your purchasing power of your nest egg.

7 – Don’t move too heavily into bonds, even in retirement.

Many who retire tend to stash most of their portfolio in bonds for the income.  Unfortunately, over a period of 10 to 15 years, inflation can easily erode the purchasing power of bonds’ interest payments.

8 – Making tax-efficient withdrawals can stretch the life of your nest egg.

Once you’re retired, your assets can last several more years if you draw on money from taxable accounts first and let the tax-advantaged accounts compound for as long as possible.

9.  Working part-time in retirement can help in more ways than one.

Working keeps you socially engaged, as well as reduces the need and amount you reduce annually from your nest egg once you retire.

10.  There are other creative ways to get more mileage out of retirement assets.

An example is that you might consider relocating to an area with lower living expenses, or even transform the equity in your home into income by taking out a reverse mortgage.

How are you going to start planning for your retirement?