Financial Planning – Retirement Savings Money Tips
There are many aspects to financial planning, the most important being: What are you planning for? It could be saving for a house, your children’s college education, or retirement just to name a few. Today we are going to talk about financial planning for retirement.
When Social Security was enacted in 1935, people could count on being able to live off their Social Security when they retired. Of course, in 1935, you could buy a loaf of bread for eight cents, a new home for less than $3500 and people made an average of $1600 a year. Those days are long gone. Now people are lucky if they can get a new home with a $3500 a month mortgage payment in most of the country, and it really isn’t possibly to live comfortably on just Social Security. Now, people need to do some financial planning to “supplement” that money they put into Social Security over the years or they really could find themselves choosing between their medication or food.
It should go without saying that the sooner you start planning financially for your retirement, the better your financial position will be when you retire. But that doesn’t mean that after a certain age, things are hopeless, it just means you might not retire as soon or will have to live on less money.
It seems as though very few companies offer pension plans, unless you are in the executive management section of the corporation with stock options, pension, etc. But those people rarely need help with planning for their retirement. Also, union and government workers usually have pension plans.
While many companies don’t offer pensions plans anymore, that doesn’t mean that they don’t have options for retirement. Things like 401K plans where your employer matches your contribution is a great part of planning for your retirement. One of the best things about a 401K plan is that while if you leave the company, you can’t keep it there, as long as you either transfer it to your new employer’s 401K plan or another retirement fund like and IRA, you don’t lose any of the money. And these plans aren’t taxed as income, so you save the tax money as well. However, if you don’t transfer these plans within a certain period of time, there are steep penalties, plus the income tax. The same applies if you withdraw from your IRA fund before retirement; penalties and taxes.
Using a professional financial advisor works well for many people as well. Companies like Meryl Lynch and others offer affordable financial planning for people in all ranges of income. A financial advisor isn’t just for the rich anymore. For many people, having a financial advisor is so helpful because it takes the burden off of what is typically an already overburdened and over scheduled life most of us are living these days. A financial advisor will take some time to get to know you, find out how much risk you want your plan to have, and help you figure out how much you need to invest over time to reach the goal you want when you retire. Once all of that is decided, your financial advisor handles all the transactions and you just send them what you decided you could afford to invest. Some people are willing to go with high risk types of plans, others want the least risky, and everything in between. But a good financial advisor can help you figure out what type of investor you are comfortable being and then create a plan that matches your wants and needs.
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