Sometimes being a dummy can be a smart thing!
Life can catch you by surprise. One morning you wake up, look into the mirror, and your realize you are looking at a maturing adult. How did that happen? lol
Well, here we are and are we ready for this thing called retirement? I look back and wish I had all the answers, but I don’t. Fortunately there is help.
Retirement plans for dummies is a great start. There is a series of helping resources you can go to and realize you are not alone. You will soon realize that it is never too late and that you can continue to invest during your retirement.
I have found the retirement guides and calculators to be very useful. I am always researching what is new and exciting.
This will help you form a plan and follow it for your success.
Savings for the late starter!
As I said, it is never too late to start preparing yourself for your golden years and there are means to catch up if needed. It will take a commitment and a consistent approach.
The best way to get started is to start saving now.
Squeeze that budget and get something into your retirement fund of choice.
Paying off your mortgage can not only give you more money each month, but will help secure the retirement comfort you are looking for. The house note is your largest expense each month and biggest debt. This is money you can use for the saving’s of your future.
By paying off your mortgage, this will allow you to be able to live on less money in retirement and give you more flexibility for doing the thing you will enjoy. I purposely paid more than my planned payment each month to accomplish the goal of paying off the mortgage early.
If you delay your social security payment until your full retirement age (read about this here in my earlier post), you will maximize your monthly payment when you start receiving it. You can delay this payment until age 70 and that will give you the biggest monthly payment for your retirement.
If you maximize the social security payment, this will benefit you because it is potentially one of your largest income streams during retirement, its inflation adjusted, it has tax advantages, and it is federally secured (well maybe?, you read about that here).
When you are investing at this stage, do not invest too aggressively. If you want to gamble, go to a casino, not your retirement fund.
For those who are fortunate enough to have large retirement funds will have a lesser effect on a bad investment, not like the smaller accounts as this can be very detrimental to the modest saving’s.
On the flip side for the later investor, you can be too conservative and will need to be a little more aggressive. For this person you want to pick your funding packages wisely and take good advice from a professional.
Do not panic and secure a proper plan to invest that will not be too risky.
Utilize and take advantage of the tax efficient plans that you can. These are the plans that will allow you to defer taxation through packages such as 401k’s, Roth IRA’s, and traditional IRA’s. Being tax efficient will pay dividends in the future.
Even though I hate to say this, but working longer can have a great impact on your retirement saving’s. It is more time to keep retirement contributions going, keeps growth within your retirement plans, and it is more time that you are not living off you retirement saving’s.
This will allow you to take social security payments later getting the advantages we have already discussed.
The longer you wait, the better your saving’s will accumulate for the future.
I wrote an article on how Baby Boomers are redefining what retirement looks like and you can read that here. I strongly encourage you to do so because today’s environment has new opportunities for you to explore.
Where can I save
There are many great saving’s mechanism that you can use to maximize your retirement saving’s. We will discuss a couple of them here that I believe everyone is aware of.
Company sponsored 401k’s are a great tax deferred plan and easy to invest in as the company will match or exceed your contribution.
Most companies today will match up to a predefined percentage of what you as the individual contributes. So if your company matches up to 6%, you should contribute 6% of your salary to this fund as a minimum.
This is essentially 12% of your gross pay going into your retirement fund. Most of these companies will provide guidance and assistance through investment firms such as Fidelity or others.
This will help take the mystery out of investing and will give you professional guidance on how be conservative or how aggressive you should be with your investments.
Another great tax deferred retirement plan is the Roth IRA. This is probably one of the most underappreciated and underused plan available today.
To qualify for the Roth IRA, you must have an adjusted gross income of less that $99k per year for the individual filing taxpayer. For the joint filing taxpayer, your adjusted gross income has to be less than $156k per year.
One of the greatest attributes of the Roth IRA is that is tax deferred and all withdrawals taken after full retirement age is tax-free. You will never pay tax on earnings from this account if managed properly.
Depending on your age, there will be limits on how much you can put towards your Roth IRA.
So I recommend that you max out your contributions to both the 401k and the Roth IRA, but don’t be discouraged as this is rare when someone has the ability to do this. Just do what you can.
Investing during retirement is a good thing!
The older you get, the more conservative you should be. However, this does not mean that you should forget your retirement fund and how it is invested.
You do want to minimize the exposure to your nest egg so it will be there when you need it.
There are some options for investing by having either a IRA or a money market fund that will produce income in your retirement.
This is a great way to fund large purchases such as cars or large home repairs in your retirement years.
So continuing investments in your retirement is good, but it takes attention to the details and a good strategy.
Best Retirement Calculators for Dummies
Calculating your retirement never has to be complicated. There are many useful tools that you can get and they are back by credible sources such as some of the best retirement planning organizations.
When you are looking for a retirement calculator, you need to consider the following items:
- The accuracy of the retirement calculator scorecard refers to the reliability of the results that are being provided.
- The usability incorporates several components, such as ease of use and visual appeal. A tool that is hard to read is even harder to understand.
- The education piece of the score consists of the tool’s explanation of the methodology, help features, and general guidance.
- Traditional retirement calculators often do not give you an accurate picture of what your after-tax retirement income will be. It is likely you will pay taxes in retirement and the amount you pay will depend on many factors that most retirement calculators often leave out.
Getting a good retirement calculator is a good start and investment into you planning and strategy of your retirement funds.
A good strategy based on accurate information is essential to having a good plan.
Never too late to be a Dummy!
There are a lot of good resources for us Dummies.
Now is the time to act!
Either fine tune your retirement plans or be open to a new future. This future can be just as exciting as the one you thought you would have.
I personally have decided to retire from the corporate world, but create a business that will allow me to have the freedom of retirement while providing a passive income to supplement my current funds.
This will allow me to pass on to my children and grandchildren a fund that I hope will help them in their future.
I published My Story to talk about how I got started in this new and exciting future.
If you have any questions or comments, please leave those below and I will get back to you ASAP.