Free Retirement Plan Retirement Questions

The Most Important 3 Key Elements To A Free Retirement Plan

Many people are concerned with their retirement plan especially in light of the economy over the past few years. This article discusses some tips that could help your evaluate your current plan.  While there are certain things you can do on your own and it is important to become educated you should also seek professional advice. There are additional resource links at the end of this article.

Free Retirement Plan The Most Important 3 Key Elements To A Free Retirement Plan

Free Retirement Plan The Most Important 3 Key Elements To A Free Retirement Plan

 

Whether you are just getting started or you are well into your working career there are some basic things you need to be aware of. This article “The Most Important 3 Key Elements To A Free Retirement Plan” discusses those basic things. If you begin this process at an early age setting aside as little as 10% or your income can yield a nice retirement benefit at age 65.

Still you need to be cautious of projections or simulations that offer projections of extreme wealth with little outlay. The higher the projected return the higher the potential risk. Higher risk equates to higher possible losses. Investments do not move in a straight upward motion. Losses can be difficult to overcome.

Still taking a balanced or middle of the road approach can be the route to go. Here are the 3 Key Elements To A Free Retirement Plan.

 

The Most Important 3 Key Elements To A Free Retirement Plan: Element #1 – Determine the base standard of living that will be acceptable in today’s dollars – This is really an easy task to accomplish. Simply look at your budget and determine what is extra. Eliminate those expenses. Then look at ways you could possible downsize in retirement. Would you go down to one automobile if you are married? Would you live in a smaller home? These are ways to reduce expenses and in some cases free up assets.

The thing to remember is this is not your ideal or dream retirement. This is a target to shoot for using a conservative approach. If your investments perform better than planned you are in great shape if not at least you will not have to get another full time or part time job after retirement.

The Most Important 3 Key Elements To A Free Retirement Plan: Element #2 – Plan your savings and investments so that the base standard of living is guaranteed – Look for conservative investments that carry guarantees so that at 65 or whatever retirement age you choose you know you will accomplish your goal. This will allow you take more risk with additional investment dollars that come from raises, expenses that are eliminated etc. You will need to plan to invest more initially but your rate of success will be higher. Do not be tempted to use a higher target investment rate of return. Plan to work longer if the required investment amount is not attainable.

Another option if you really want to go conservative is to eliminate Social Security benefits from your calculations. This will allow you some flexibility so that no matter what Social Security pays it will be extra. This may mean a required savings rate of 20% and then as you age and your family dynamic changes increasing it to 30% or even 40%.

There are plenty of free retirement calculators online, and some that are very low cost, including the one on this site. So take your time and look at all the options that fit your situation. Using an inflation rate of 3% in today’s environment makes sense. Do not be fooled by the amount of money that retirement calculators say you will need. At 3% the amount of money needed to by an item that costs $1 will double every  24 years..

The Most Important 3 Key Elements To A Free Retirement Plan: Element #3 – Take risk with additional dollars – Like I mentioned earlier. As additional dollars become available for investing having a plan that will give you a base retirement means you can take more risk with extra dollars. If the risker investments work out then great and if not you at least have your base retirement. If your investments with more risk increase in value you should take some of your winnings off the table. This will lock in gains and help either reduce your planned retirement age or increase the level of income available at retirement.

These are some basic concepts that will help you with retirement. There are certain things that you can do on your own but you should never hesitate to seek professional help. A second opinion can help avoid possible pitfalls that you did not think of.

Disclosure

Resources:

Wikipedia: Pension

Vertex42.com: Retirement Savings Calculator