Have you ever wondered what the Beatles were thinking when they sang “Will you still need me, will you still feed me, when I’m sixty-four?” Retirement may be the point in time when a person stops working, but unfortunately, the cost of living doesn’t stop. That’s why it’s important to plan for retirement.
History of Retirement
The idea of retirement is a relatively new one, being introduced during the late 19th century. Prior to that, short life expectancy and the absence of pension plans meant that most workers, by necessity, worked until death. Times have changed. Life expectancy has more than doubled in the last hundred years and this shift has made retirement a hot topic, as more and more people literally outlive their ability to work.
Planning for retirement is essential, not a choice, whether or not you expect to be one of the 316,600 people who are currently living past age 100 worldwide.
Where Do I Start?
When planning for retirement, a great first step is to create a budget. Ensure that you aren’t spending more money than you’re bringing in and explore money-saving options. Skip Starbucks and brew your own coffee now and then. Eat out once a month less than you do now. Taking these small steps can add up to big savings over time.
Another good idea is to sign up for an employee sponsored 401K plan. By arranging for a set percentage of your income to go directly into your 401K, you’ll be saving money without having to think about it. This money is tax-deductible and some employers will even match your contributions. It may sound too good to be true, but it isn’t.
If a 401K is not an option for you, you can create your own Individual Retirement Account (IRA). While there are criteria to determine how much you are permitted to contribute, it may be possible to contribute up to $5,000 per year of tax-deductible funds. A Roth IRA, conversely, is not tax deductible, but you won’t have to pay taxes on it when you begin taking money out while CDs and money markets can accrue interest.
Where Do I Finish?
Now that you’ve managed to start saving, investing is a great way to create new income for retirement. This can be done with stocks and bonds. Depending on your age and your investment comfort level, you may balance your portfolio with a combination of low and high risk holdings.
Generally speaking, the younger you are, the more risk you can afford to take. Consulting an investment professional before buying is recommended because while many a fortune has been made in this arena, many a shirt has been lost, as well.
Professionals can help you map out a plan. They can be expensive, but if they help you make money and secure a comfortable retirement, it is money well spent.
How Much Do I Need?
Try a retirement calculator to find out how much you’ll need to live after retirement. But don’t leave it to chance, like the Beatles did, wondering if somebody will still feed you when you’re sixty-four. Take matters into your own hands and see to it that you’re healthy, wealthy and wise.
– By Samantha B. Rivers, Editor