If you are in the State of New Jersey and would like to discuss your estate plan, our team at Willis Law Group LLC is here to provide you with any assistance that you may need. To schedule a consultation, we encourage you to give our main office a call at (877) 296-2575 or attend one of our free educational workshops throughout New Jersey.
Many Americans find themselves underprepared when it comes to retirement planning. A majority of baby boomers (born between 1946 and 1964) and Generation Xers (born between 1965 and 1978) often end up without enough retirement savings. According to the Insured Retirement Institute, only 25% of baby boomers feel they have sufficient savings for retirement. If you are in your 50s and nearing retirement without substantial savings or a plan, do not despair. It is never too late to start planning.
Although every working professional should contribute towards retirement as early as possible, they often delay the process for various reasons. If you are nearing your 50s without a post-retirement plan and see yourself working another 10 to 15 years, this is an opportunity to plan judiciously and save for your retirement.
Here are five strategic steps for achieving the best retirement plan:
1. Set Specific and Practical Goals
Proper retirement planning begins with setting specific goals. Calculate your current income, total savings and ongoing investments to understand how much you could save. Most importantly, make sure to set realistic goals.
While providing for emergency expenses and paying off a mortgage can be your short-term and intermediate goals, saving up for retirement should be your long-term goal. An annual financial review is helpful in evaluating your past goals and understanding your earnings, as well as your liabilities.
2. Plan a Realistic Budget Focusing on Retirement
When you review your monthly and annual expenses, list the factors that are likely to remain constant for the next few years. Next, allocate funds to each category in a way that will allow you to save more for your retirement.
According to financial experts, if you are saving for retirement after 50, it is best to contribute 30% of your salary towards your retirement. If you find that goal difficult to meet, look at your budget list and reduce expenses where you can.
3. Pay Off Debts
Paying off debts early will help you meet your retirement budgets, and it will also ease financial burden. According to an AARP report, 44% of Americans continue to pay for their home after they retire. Clearing off outstanding debts, credit card bills, loans and mortgages will make it much easier to prioritize money for retirement.
4. Invest in Retirement Plans
401(k)s, 403(b)s and IRAs are some of the most common retirement plans available. While 401(k)s are one of the most popular plans, not all companies offer them and those that do have their own (and often restrictive) investment rules. Then there are two types of IRAs: Traditional IRAs and Roth IRAs.
To make the best choice among the many retirement plan options, it is essential to have a thorough understanding of IRA vs 401(k), Roth IRA vs 401(k) and other investment alternatives, as well as any contribution limits that may exist.
5. Diversify Your Investments
A diversified investment strategy will help keep you on a firm financial footing. Do not stash all of your money in banks. Instead, create an investment portfolio and explore your options. It is important to diversify and distribute your money among multiple sectors. Considering the volatility of the markets, diversification of your investment portfolio safeguards your capital and also helps it to grow.
It’s Time to Step Up a Gear
A concrete retirement plan with emphasis on savings is essential to ensure a comfortable and healthy life during retirement. Saving for your retirement is the first priority and the sooner you start, the better your chances of achieving your retirement goals.