How to Add Six Figures to Your Retirement Fund

Retirement planning is one of the most important plans for the future an individual can have, because it will allow you to know how you will live during your retirement years. There are many things to consider during this process, including the future costs of daily living expenses, your ideal retirement age, and where your retirement funds will come from. For this reason, saving for retirement is an essential part of retirement planning. Many employers assist their employees with this part of the saving process. The programs that are offered include pension plans, 401(k) plans, or a combination of both plans. Although many employers offer financial planning for retirement, some employees will choose to speak to a financial professional about additional retirement savings.

One thing to consider about personal financial planners is that they charge fees. However, banks will perform the same services for free for account holders. The bank will offer services such as saving or investment options. The reason the bank offers these services free of charge is they will benefit from the increased business provided by long-term savings accounts. When saving for retirement, it is important to understand all the expenses that you will have so you know how much retirement savings you will need to live comfortably. When it comes to expenses, it is always highly recommended to pay off all mortgage debts to relive some of the burden on your retirement fund. One of the best benefits of retirement planning is that a person can begin this process at any age, but the sooner you start, the more you will have when you retire.

Important Considerations

One way to get better ideas of what you should expect when it is time is to talk to financial advisors or by attending workshops. This process should be started at least four or five years before you want to retire so you can save at a more reasonable pace and can adjust your lifestyle if necessary.
It is vital to attempt to determine exactly how much your post retirement expenses will be. To do this, a few questions need to be asked and answered including:

• How well will I live?
• Do I want to travel?
• How much will my hobbies cost?
• Where do I want to live?
• Will I have loan or credit card debts?
• Do I need to purchase a new home?

Once these questions have been answered, then you will need to know what to expect when you retire. It is important to apply for social security at least three months before the year of retirement. There are also other things to consider such as life insurance, social security benefits, and government pension plans. It is also important to have a separate emergency fund available after retirement. These funds are needed in case of unexpected bills such as emergency medical care and car repairs. The separate emergency fund will protect your retirement fund.

Saving for Retirement

The reason most professionals advice to begin saving at least five years before retirement is that this will add at least six figures to your retirement fund. If an individual can begin saving for retirement at the age of 30, he or she can put a smaller amount in their retirement fund each month to make saving much easier. A simple rule of thumb is that a person in their 20s should set aside at least 10 percent of their annual income, and a person in their 40s should put aside 30 percent. The bottom line is when an individual is planning for retirement, they will need approximately 75 percent of their total income to ensure they will be able to keep their current lifestyle after they turn 60.