Why retirement planning is so important and how you can do it.

It’s my pleasure to present this guest post by Amy Nickson, from Working Moms’ Word.

Per Amy, “Hey there! I am Amy Nickson. I am here in loving memory of my mom – sharing thoughts and opinion to help single parents, child, working moms. It’s a platform where I can reach all the working moms. I love to write on various topic especially finance. Though I’m not an expert but life has taught me a lot of things, and I don’t mind sharing my experience with you all.”

Retirement, aka Financial Independence. It’s within your reach. Here’s some great tips to help you grab it.

How much money will you need to secure your retirement? Most of the people don’t know the answer because they don’t set retirement goals. They prefer to achieve other financial goals instead. As a result, many people face poverty in their retirement.

According to a survey conducted by the GoBankingRates, 56% of people in our country have less than $10,000 saved in their retirement. The survey revealed that 23% of Americans have less than $10,000 saved for their retirement. One-third of people said they have no savings for their retirement.

People in our nation are behind on their retirement savings. The reason? They don’t plan for their retirement.

Why is retirement planning crucial?

Retirement planning is important to achieve financial independence. If you don’t have enough money for your retirement you may have to work for a longer time than usual. The average retirement age in our nation is 63, but people are working longer until the age of 70 or older.

According to the study conducted by the human resources consulting firm- Willis Towers Watson, 5% of Americans believe that they’ll never be able to retire at all. Even people who plan to retire at the age of 65 are not sure about their retirement. They said, there is less chance to retire at the right age.

  • No one wants to work until death; every job has high stress. If you want to enjoy a stress -free retirement, then you have to plan properly for your retirement.

  • Retirement planning helps you to save enough to secure your golden days. Remember, as you age, many health issues can occur. The health issues can prevent you from working. Thus, it is important to have enough money to manage medical expenses along with basic living costs.

  • In your retirement, the main source of your income will stop. You have to maintain your lifestyle with the limited money. Also, it is expected that the living cost will increase when you retire. If you don’t have enough money in a retirement account, then you will not be able to maintain your current lifestyle in your retirement.

  • Many people rely on their social security benefit for living their post-retirement life. But social security is not enough because it is facing a significant shortfall. The benefit won’t be there for the young Americans. The Social Security trust fund will be reduced by the year of 2033. There won’t be sufficient money in the system to pay the beneficiaries. So, you should start planning for your retirement so that you can save enough money for your retirement.

How can you plan for your retirement?

Saving enough money for retirement is difficult; it takes years of devotion, but, it is not impossible. You can secure your retirement by proper planning and hard work.

Here are some 8 ways you can plan your retirement.

1. Set a goal and work on it

This is the right time to set a goal and work on it as the year has just started. You should set retirement saving goal now and work on it.

Remember, there is no perfect age to start saving for retirement. The earlier, the better. If you think you are too young to set retirement saving goal, then you are wrong. If you have started earning, you should start planning for your retirement. (SO totally agree. Wish I’d started investing in my 20’s. “Shin”)

2. Revisit your budget to modify it

To start saving money for the retirement, you have to include it in your budget. Otherwise, it will be difficult for you to manage other expenses. Thus, modify your budget to include the retirement saving in it. To do so, you may have to eliminate extra expenses.

You have to do it because unnecessary expenses are eating your hard-earned money. So, find out extra expenses that are not vital and cut them to save more bucks. It will help you to save for retirement while maintaining other necessary expenses ( Household costs, debt payments, gas, and insurance bill).

3. Know how much do you need to retire?

To decide how much is enough for a comfortable retirement, it is important to decide what kind of lifestyle you want to maintain in your retirement. Do you expect to travel in your retirement? How often do you want to travel? Do you expect to live a lavish lifestyle in retirement? Do you want to move to a retire-friendly place?

You have to ask these questions to yourself to decide about the “Perfect amount” you will need for your retirement.

However, you have to be realistic in determining your lifestyle in your retirement. Consider, medical issues, low cash flow, and inflated price rate while deciding the “Perfect amount”.

4. Take advantage of a 401(K)

You should take advantage of the employer matching program to grow your retirement savings faster. If your employer offers a retirement savings plan 401(k), you should start contributing money. It has many advantages:

  • You can easily manage it as it is associated with your employer.

  • Deciding the amount that you want to put in it becomes easier.

  • You are getting more free money because your money will grow in compounding way for 30-40 years. Try to get the full employer match.

  • You can also save taxes on your savings as this plan offers tax benefits.

5. Decide how much you need to save each month

You have to calculate the amount that you need to set aside to reach your retirement savings goal. Knowing the exact amount helps to stay on the track. A retirement calculator can help you to decide it. Go online to find out free retirement calculator to know exactly what amount you need to save each month.

6. Build an emergency fund to protect your retirement savings

Remember, you shouldn’t take out money from your retirement account. Once you take out money from your retirement account, you will not be able o get the full benefit. The money will stop growing and you need to pay tax on the withdrawal.

Remember, you have to build an emergency fund. It will help you to overcome any emergency like job loss, accident, and serious illness without tapping money from the retirement account.

7. Get out of debt and avoid accumulating further debts

To secure your financial future, you have to get out of the costly debts. Because, having higher interest rate debt means, you are losing money by paying the interest rate. Thus, you should try to get out of the debt as early as possible. If you are young and earning well, then you should pay off your credit card debts, personal loan, PDL, and other unsecured loans.

You should try to avoid accumulating further debts to focus on saving for retirement. Moreover, you have to work hard to pay off the mortgage and student loan (if any).

8. Seek help from a financial advisor

Deciding the exact amount that you need to save for retirement can be difficult because expenses are increasing day by day. Also, understanding the retirement calculators that are available online can be difficult for the beginners. Thus, you should talk to a financial advisor for help.

Lastly, to secure your retirement, you may have to consider a lifestyle change. A frugal lifestyle helps you to set aside money. For example, buying a smaller home and car, planning budget trips, cutting down household costs, and reducing credit card usage can help you to save a lot of money that you can put toward your retirement fund.


“Shin” here. Going to throw in a bit more. Retirement doesn’t have to come at an age, but rather a Dollar Figure. When you have enough to cover all your expenses and not run out, then you’re Financially Indendent and can retire at what ever age you are.

So, what are you doing to “Plan Your Prosperity?”

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About Keith

Keith, aka Shin, is a close to 60 former teacher and counselor who's blundered through the world of personal finance, learning the basics later in life than he likes. It's his mission to share as much about personal finance as possible, helping others get a handle on it, much earlier than he did.
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