Tips for Preparing for Retirement Success


The retirement planning process takes time and effort. Sometimes it can seem like a complicated task. But what you do today can help you achieve your goals and help you maintain the lifestyle you want in your later years.

Here are some tips to help you reach your retirement goals one step at a time.

Tip 1: Focus on what you can do now

If you feel at ease about the days when you no longer work seem fleeting, you are not alone. According to a survey by the Employment Benefit Research Institute, only 23% of workers are very confident that they are putting away enough money to live securely during retirement. Only 42% have tried running the numbers to see what they’ll need to cover their expenses when they’re retired. Without enough information, you may feel unsure of where to start.

If you’re not feeling confident about retirement or fall into the category of “the unknown” because you haven’t yet made a basic plan, you can start preparing for the future with these first steps.

Make a plan and put it in writing

Find out what you need to retire. Even if retirement is a long-term goal, a ballpark estimate will do. Many experts say to use 70% to 80% of your working income as a ballpark number, but this will depend on you and your likes, dislikes, health and your plans to retire. Pick a starting number, then review the income sources you’ll have when you retire, such as Social Security or a 401(k) account.

Figure out what you need to save annually to meet your goal, and create a monthly savings plan that will get you there.

carry out your plan

This is by far the most important first step because putting it off will only serve as a stumbling block in your path to financial freedom. If you find that you won’t reach your goal with the money you’re currently saving, start today by finding ways to save more, reduce your spending needs, get out of debt, or adjust your plans. Take more action. It is never too late to get back on the right track.

track your progress

Running a retirement calculation at least once per year is a smart move. This will help you see whether you are on track to meet your goals. Keep in mind that your plan should be fluid, not static. Think about the impact that life events such as marriage or divorce, promotion or layoff, the birth of a child, and education funding will have on your plan.

Make changes to your plan if necessary as your life changes, and keep the lines of communication open with your spouse, partner, friends, family, and financial planner.

Tip 2: Protect yourself and your loved ones

When you plan for the day you retire, it’s easy to get caught up in the distant future and avoid thinking about the risks of the present. Avoid that mistake by thinking about the financial risks you may face and those you can reduce or eliminate.

your life

Make sure you have adequate life insurance and the right type of insurance for your needs. Before thinking about what types of policies you may need to fill any coverage gaps, it is best to review your coverage needs using an unbiased approach. You can choose from term, whole life, universal life and variable life plans.

Review your policies at least once a year. As your life changes or major life events occur, your coverage may need to change as well. As your scheduled retirement date approaches, be sure to revisit your life insurance needs.

your health

A long-term disability event or a stay in a nursing home can have a major and long-lasting impact on your wealth. Adequate coverage can reduce the financial risk that comes with these events and should be a part of your retirement planning review. If you’re stressed about your health care plan as you retire, be sure to include health care costs in your budgeting plan.

your property

When it comes to investing, a diversified portfolio helps reduce the risk of your entire nest egg going south. Choosing the right investment allocation based on your financial goals, age, risk appetite and time frame can make a big impact. But you also want to think about other assets, such as your home or other real estate assets.

Tip 3: Look at all your retirement savings options

There are many options that can help you save for the retirement of your dreams. Here are three accounts to consider.

employer-sponsored retirement plans

Many financial experts suggest that your company’s retirement plan, such as a 401(k) or 403(b), may be one of the best places to put your money. Why?

  • Contributions are made pre-tax, so they reduce your taxable income. They also grow tax-deferred, so you won’t pay taxes on the gains until you withdraw the money.
  • Most companies offer matching programs that can increase your return on your money. To benefit from the match program, make sure you’re putting money into your account at least as far as company match, if not more. The average employer contribution amount is only around 4.7%, and most people can do better. Contact your Human Resources department for more information.
  • Employer-sponsored plans are more portable than ever. They can be transferred to an IRA or future employer’s plan without tax consequences.

View IRA

Even if you’re participating in an employer-sponsored plan, don’t feel that it’s your only option when it comes to saving for retirement. IRAs are another great way to put money away for the future. Certain income limits and other rules apply to deducting contributions or making contributions to a Roth IRA, so be sure you’re choosing the best IRA for your needs. You can always contribute to both if you’re not sure.

Learn about HSAs

Health savings accounts offer great tax benefits for out-of-pocket health care costs. Some financial planners suggest they can be a source of retirement income to apply to health care costs, which increase when people retire.

Tip 4: Improve your overall financial well-being

Financial well-being is a term used to describe the state of our overall financial health and is related to how well a person is prepared to retire. Look at the way you manage your finances and take a holistic approach to your overall financial health. Here are some easy ways to improve your sense of financial wellness and find more cash to invest in your later years.

increase your income

If you feel you don’t have enough income to save, you may want to supplement your income by working overtime, getting a part-time job, starting a business, or buying a rental property. Use the extra income to reduce debt so you have more for the future.

reduce your spending

A budget or “personal spending plan” is an important step for retirement success. Living below your means allows you to build up funds to invest in a retirement vehicle for the future. Go beyond tracking where your money has gone and tell your money where to go instead. Find out what you spend each month in fixed costs like housing, utilities and food versus your discretionary lifestyle costs like travel and eating out. See where you can cut back and put those savings toward your future.

Refinance and Consolidate Loans

If you have high-interest debt, spend some time looking for lenders who are willing to refinance your current loan at a lower rate than you’re paying. Secured loans, such as car loans, will have lower rates than unsecured loans. Real estate-based loans are often tax-deductible and can be financed over longer periods of time than other types of loans. If rates are low, it may be a good time to refinance your mortgage for a lower payment and the amount you’ll save each month in your retirement fund.

Stop Paying Extra Fees and Charges

Is your bank and credit card charging high fees? Shop for the best deals by using online resources to compare rates and compare services between banks, credit unions, credit cards and lenders.

Find ways to reduce your taxes

Use flexible spending accounts (FSAs), if offered by your company, to pay for medical and dependent care costs on a pre-tax basis. Max out your HSA if you’re on a high-deductible health plan. Both of these options will lower your taxes and free up money for savings.

Improving your finances doesn’t happen fast. But if you take some of these steps regularly, you’ll be on your way to retirement success.

Tips for Preparing for Retirement Success

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