Ten Tips for Retirement Planning

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It is never too early to start planning for retirement

The earlier you start, the more money you will have when you retire. Go to http://www.bankrate.com/calculators/retirement/retirement-plan-calculator.aspx for a retirement planning calculator. Begin planning immediately! Even if you didn’t get started early, it’s never too late.

Analyze your retirement needs and create a written plan

You can consult with an accountant, tax advisor, or investment counselor, but many people do their own planning and do very well. Remember that you will need to factor inflation into your plan. Don’t forget to account for Social Security contributions and payments. Also, if your house is paid off when you retire, you can sell it, downsize, and use the profit for retirement, or stay in the house and eliminate monthly mortgage payments.

Invest money from each paycheck you receive, no matter how small the amount

Compound interest will increase your investments faster than you expect. Having the money taken out before you get your check ensures that you will not fail to invest.

Diversify your investments

Some should be low risk such as savings accounts, CDs, money market accounts, and property. Some should be medium risk, for example, company retirement plans, annuities, and bonds, and some should be moderately high risk, such as stocks. Try to avoid or reduce investment fees as much as possible.

Monitor your investments carefully

Move money that is not growing into a different investment vehicle. Remember that it’s best to hold stocks to ride out the ups and downs of the stock market. Resist the urge to sell stocks when the stock market drops.

Always take advantage of your company’s 403(b) or 401(k) retirement plans

You will reduce your yearly taxable income and build retirement funds. In these kinds of plans, you decide how much to invest and many companies match at least part of the money. This is a lucrative investment that can be “rolled over” into an individual retirement account (IRA) upon retirement. Ask your employer for a summary plan description of your retirement plan. Employee stock and profit-sharing plans are also good investments for retirement.

Don’t take a loan out on your 401k

Even though you are required to pay it back, you will pay extra taxes and the money that you borrowed will not earn a return while it is being paid back.

Invest in an IRA and a Roth IRA for both pretax and after-tax funds.

Remember— that you need a will, long-term medical insurance, and life insurance when you retire.

You may want to work after retirement, both to keep busy and to increase your income. Whether you work part time or full time at your former job or at a new one, working after retirement is an option you should consider.

Review and revise your plan regularly

If at all possible, never withdraw money early from your retirement plan or investments!

How The EAP Can Help

Contact your EAP to consult with a financial planner who can answer questions about planning, investing, and saving for your future retirement.