You should start planning for retirement as soon as you settle into your career. Many people put off this process until they are nearly ready to retire, leaving them unprepared to face the complexities and challenges of retirement. You may have many options to consider, and you should take time to weigh them.
By carefully allocating your resources during your career, you can improve your chances of enjoying a comfortable and healthy retirement. This may involve living below your means, which means spending less money than you earn. While living below your means may seem like an austere idea, many professionals successfully craft spending plans that allow them to enjoy leisure activities while building financial security for retirement. Read more here about living below your means, and read more here about saving for retirement more generally.
You may want to set out your budget for retirement so that you understand how your expenses will change. Many current expenses will drop off, while you may add expenses in a few areas like health care. The odds are that you will need a smaller budget in retirement than you did during your career. Read more here about calculating your budget for retirement.
Once you make the decision to retire, you may want to know about ways to save money during your retirement. Donating to a charitable organization or getting involved in volunteer work may allow you to support causes that interest you while gaining access to tax deductions. In addition to charitable contributions, you may be able to get deductions in areas such as medical expenses, business and investment expenses, and contributions to retirement plans. Read more here about charitable contributions, and read more here about common types of tax deductions in retirement.
You should consider placing some of your income in a retirement plan, such as an IRA or a 401(k). A financial adviser can guide you in your investment decisions, or you can handle them on your own if you learn enough about your options and do not have an especially sophisticated plan. If you are self-employed, you can choose among several different types of plans, each of which comes with distinctive advantages. Read more here about investing for retirement.
People approaching retirement often want to know if they can get access to their retirement money in advance. This may not be ideal, but there are certain ways to get some of your retirement money early (more than six months before you turn 60) without incurring the standard penalty. Read more here about getting your retirement money early.
As you approach the later stages of your life, you may want to make sure that your loved ones and other heirs receive any benefits that are left in your retirement accounts after you die. You should name a beneficiary for each account, which will allow the benefits to pass outside the cumbersome probate process. If someone has a financial power of attorney on your behalf, you should provide them with the necessary information to access your accounts. Read more here about how to make sure that family members and other beneficiaries receive benefits from your retirement plan.
Social Security Benefits
Part of your financial safety net during retirement comes from your Social Security benefits. The amount of Social Security benefits that you receive each month will depend on the age at which you claim them. If you do not claim them until after you retire, your benefits will be larger. Read more here about when to claim your Social Security benefits. You can continue to work after claiming your benefits, although your benefits may be reduced according to the Social Security earnings limit until you reach full retirement age. Read more here about working while collecting Social Security benefits.