New year is the new beginning; this is the time when you should revisit your last year's checklist to find out the mistakes that you made and to-dos on which you should work on. Well, the first month of the year is the busiest month because you have to sort out some important tasks like getting prepared for tax time, setting financial goals, formulating a new budget, etc.
To reduce your burden, today we will help you in setting your retirement goals.
Have a look:
1. Calculate what you need for retirement
Are you nearing retirement or you’ve already retired? In both the cases, you need to decide exactly how much you will require to maintain your current lifestyle in your retirement. How can you calculate the perfect number?
Normally, most of the people are not be able to decide the “perfect number” for their retirement. So, I would like to suggest you seek professional help. A knowledgeable financial advisor can tell you how much you need for retirement.
However, some retirement calculators available online are not upto the mark.
So, make sure the calculator you are choosing is a good one to understand how much money you need to live comfortably in your retirement days.
2. Revise your retirement plan time to time
If you already have a retirement plan, try to revisit it.
Because things are changing, so your current plan needs to be changed.
Many scenarios can occur in your way; for example, your investment might not work as you planned, your children can ask your for funding their higher studies, or your children can move back to your home due to unemployment. Thus, you should revisit your retirement plan to make necessary changes.
You need to make sure that your current retirement plan is updated according to the current financial situation.
Also, you need to guess about the future financial situation and make necessary changes in your retirement plan.
3. People who are mid-20s or early 30s should start setting their retirement goal
Most of the youngsters, who have just started earning, think that they are too young to think about their retirement saving. Well, this is a wrong concept.
So, all young professionals should set their retirement goal in 2018 to ensure a financially secure retirement.
You can open a 401(k) account or other retirement savings account to save money.
There are many retirement saving options for young entrepreneurs as well.
Seek advice or research well to start saving for your retirement.
4. Are you 70.5 years old or above? Take Required Minimum Distributions (RMDs)
If the person don’t withdraw the amount, then he/she has to pay a 50% excise tax on the amount not distributed as required.
If you are 70 and ½ or above and invest money in a retirement account, then you need to withdraw from it before the end of the year. If you don’t follow this rule, you will be penalized. Thus, take a lesson from it and make sure you will not commit the same mistake in this year. Make sure you withdraw it on time.
5. Pay taxes on your retirement savings and withdrawals
People should pay tax on their retirement savings. Even if you withdraw from your retirement savings, then also you need to pay to the Uncle Sam.
Talk to a financial advisor to get assistance.
6. Give priority to an emergency fund
Young professionals and people nearing retirement should keep an emergency fund.
Your emergency fund will save you to meet expenses that come surprisingly.
Most of the times,people who don’t have an emergency fund pull money from their retirement fund to meet unforeseen expenses. It is a blunder since pulling money from a retirement account will charge hefty taxes and it will stop growing.
So, to secure your retirement, you should nourish an emergency fund as soon as possible.
7. Decide where you will live in your retirement
Some places in our nation are not ideal for living in your golden days. But that doesn’t mean you have to buy a new home at a retirement friendly place. You need to think about other important things as well. What are they?
Try to stay at a place when you can reach a hospital, bank, and your extended family easily. Because, most of the times, a retired person spends a hefty amount on travelling just to meet his/her family members. Since health issues are quite a normal thing at out older age, you need to stay in an area where hospitals are available.
If your current location meets these criteria, then don’t try to move all of a sudden. Instead of changing your current location, plan trips with your partner to enjoy your retirement days.
8. Talk to a financial advisor to get advice
A financial advisor can tell you how you can reduce tax liabilities and maximize tax deduction. The advisor can also guide you whether or not you need to relocate. You will also get asset allocation assistance.
Lastly, I would like to suggest you visualize your retirement that you want. Try to be more specific that you want in your retirement.
By doing so, you will be able to remain focused toward the goal along with attaining other financial goals.