Planning for retirement can be a little overwhelming. You have to look at so many numbers and make so many decisions. Before you start making a plan, here are some steps that you should take to ensure you’re ready to retire when you want to.
The first step in planning for retirement is figuring up how much you need to live on during retirement. This ideal number is different for everyone. Some people have a paid off mortgage before retirement and can live on very little money. Others want to buy a new home to retire in or want to travel during retirement.
Decide what you can live on during your golden years, making sure to take inflation into account when you figure up your dollar amount. There are great online calculators that can help you account for inflation.
The next step is to see what sum would give you that much money during your retirement years. The goal here is to have enough in savings that you can live off the interest for most of your retired life. You can then leave the lump sum principle to your children or grandchildren. A financial planner or good retirement planning calculator can help you figure out the dollar amount you need to get the type of investment returns you’re wanting.
Finally, decide how you’re going to save for retirement. There are lots of different savings avenues, and you should probably plan to put around 10% of your income back for when you retire. Max out at least one savings account each year, and watch compound interest take you closer and closer to a relaxing and stress-free retirement.