How to Develop Personal Retirement GoalsWhen it comes to your retirement, developing goals can go a long way. While most people may recognize a need to save for the future, having concrete, written plans can help you understand what you need to do to reach the retirement of your dreams. While many variables affect the retirement planning process, having measurable goals can help you make adjustments along the way to overcome any adverse changes.
Assess Your LifestyleRetirement means different things to different people. While you might envision working part-time in retirement, with your income supplemented by Social Security payments, others might prefer a lifelong vacation funded primarily with savings. Whichever choice you make, you’ll have to build a realistic assessment of your lifestyle into your personal retirement goals. A retirement lifestyle that includes a stream of income may require less personal savings than a non-working retirement. Armed with this self-knowledge, you can set more realistic and appropriate goals when you develop your retirement plan.
Calculate Your NeedsThe amount of money you should have saved by the time you retire is another variable that can be dramatically different from person to person. Financial calculators can approximate how much money you’ll have in the future based on your age and current savings patterns. If you’ll feel more comfortable with a larger cushion when you retire, you might have to ramp up your savings at a younger age.
Don’t Overlook SurprisesOver a lifetime, you can expect a number of financial surprises. Some are easier to anticipate than others, but common expenses that are often overlooked include inflation, medical costs, gifts to family and friends, travel expenses, and increased income tax rates. If you don’t incorporate the rising costs of goods and services into your retirement goals, you might find yourself behind when it comes to paying for everyday expenses when you retire. Medical costs are a bit more variable, but most retirees can expect an increase in the number of tests and procedures. Gifts and travel expenses are easier to predict and control but often creep into the retirement planning arena. Higher taxes depend on a number of variables but can prove costly when withdrawing from tax-deferred sources, such as IRAs.
Revisit and ReviseRetirement planning is not a “one-and-done” enterprise. As time progresses, many if not most of the variables in your retirement plan can change — your ability to save might rise or fall, your future needs may increase or decrease, and you may pick up additional funding sources for your plan along the way, such as inheritances or bonus pay.
Keeping your family informed of your retirement plans might be important too. If you have young children at home, it can teach them the importance of planning for the future. If you have grown children, the conversation can help prepare the family to take care of your assets should you need assistance later in life. Periodically reviewing and updating your plan can help keep it current and more likely to succeed in terms of achieving your retirement goals.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
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