When to Start Retirement Planning
The time to begin retirement planning is when you start thinking about retirement. Unfortunately, a lot of people do not start thinking about retirement until it is too late. This means you should start thinking about retirement now even if you do not have any concrete plans for it.
The main point to remember is that no matter what you plan to do when you retire and where you plan to go you will need money.
That means you should start planning to provide yourself with a retirement income. You should implement a plan of savings and investments designed to provide that income even if you do not have a specific retirement plan.
How to Begin a Retirement Plan
The way to begin a retirement plan is to take stock of the assets that you have right now. This means any investments you have, property you own, funds you have in the bank and retirement vehicles available to you. If you have a retirement plan available at your work you should take a look at it and see if it meets your needs.
If you do not have a tax-deferred retirement plan such as an IRA perhaps it is time to being one. A tax-deferred vehicle allows you to save funds for retirement without increasing your taxable income. There are a vast number of such vehicles available so it is often a good idea to talk to a retirement planner or financial planner before making a decision.
It is also a good idea to start saving even if you do not have a specific plan or vehicle in mind. You can always shift your funds into a tax deferred instrument like an annuity later on. A good basic retirement plan is to save or investment 10% of income even if it is not in a retirement instrument.
Information is the Starting Point
One of the worst mistakes people planning for retirement make is to not get enough information before they start. Do as much research as you can about the retirement investments that you can plan to use. Find out everything about them including all of the limitations and restrictions.
An example of such a restriction is the 10% tax penalty the IRS charges on most tax- deferred instruments. Many people end up costing themselves a lot of money by not taking this into account when they save for retirement. If they had done some reading or studying those people might have realized that penalty existed and put their money somewhere else.
Do not forget to study alternatives such as annuities because such instruments are often better for average people than some of the more common investments. An annuity has the advantage of being both tax deferred and insured. There is also no limit on the amount of tax deferred income a person can place into one.
A Retirement Plan Should be Flexible
A retirement plan should be flexible because the world is constantly changing. This means you should regularly look at your retirement plan (once a year is usually sufficient) and be willing to change it as circumstances change. An example of changing circumstances could be the disappearance of a source of retirement income such as a pension.
Always be willing to change the retirement plan because something will always change. Most retirement plans have provisions for change built into them that you can take advantage of. A person can use a rollover to move funds from an IRA into an annuity for example.