|
by: Jon Arnold
There has always been a need for retirement planning and today
is certainly no different. There are 401(k)s and many other
types of retirement plans that are available to you. You will
need to take the time needed to evaluate what your current
financial needs are and what you expect the future to hold.
Recent events, such as the rise in energy costs and the ever-skyrocketing
health care costs need to be factored in. Although gas prices
have been fluctuating lately, I think they are going to go
back up, possibly even surpassing the extremes we saw all
too recently. These types of events can take a toll on your
retirement plan very quickly. Prudent planning begins early
and you need a good source of information. Websites like http://jag-info-resources.com/retirement/
are an excellent resource to go to find answers to the questions
you may have.
Did you know that most retirement plans have a ceiling of
10% of your pre-tax wages that you can contribute? While that
may sound good when you view it against a 2% inflation rate,
you must keep in mind that your planning today is not just
for the ideal future, but the future that will be reality
for you if things turn out to not be ideal or according to
your plans today.
By starting early and contributing the maximum that you can
afford, you will have a better chance of being prepared for
the unforeseen. This is made much easier today because your
401k plan is now transferable from one employer to another.
This allows you to continue to grow your retirement account
even when you choose to change jobs or even careers.
Unsure of what you will need for retirement? There are calculators
like the one at my site as shown in my author box below that
will help you figure it out for yourself. This is a helpful
tool that lets you see if you are on track or not. Don’t
forget that life expectancy is getting longer. When Social
Security was passed in the 1930s people lived about 2 years
after retirement. Today you can expect to live 20-30 years
past retirement and, suddenly, the amount you need to retire
comfortably with a major change in lifestyle gets very large.
Lets say that today you need $40,000 to live on and you retire
in 20 years, you will need a minimum of $850,000 to carry
you through retirement. That is assuming that you will live
an additional 20 years after you retire and are in good health.
There is something to be said for debt reduction as being
part of your retirement planning, as well, since the last
thing you want to do is go into retirement with a ton of debt
still hanging over your head.
Having $40,000 a year to live on with little to no debt will
obviously go farther than if you still have the same debt
load as you do now. If you reduce your debt load by the same
amount that you save for retirement, you double your retirement
savings.
One cannot have a conversation about retirement without the
subject of taxes coming into it. The money you put into your
401(k) is pre-tax so you will pay taxes on it when you get
disbursements. The 401(k) is intended for retirement, so there
are also very heavy tax penalties if you withdraw any funds
before you turn 59.5 years of age. If at all possible, do
not make any early withdrawals from your retirement account,
since most people have found that in addition to the heavy
tax penalties for doing so, the prospect of paying it back,
even with good intentions, is tougher than it seems.
About The Author
Jon Arnold is a computer engineer and long-term world traveler
who maintains many websites to pass along his knowledge and
findings. You can read more about Retirement and 401k Planning
at his web site at http://jag-info-resources.com/retirement/.
|
