A:

When considering how to plan for retirement, firstly think about the age at which you want to retire and the lifestyle you want to enjoy. The older you are when you retire, the longer you have to save and the fewer years you have to support yourself out of savings; however, the older you are when you retire, the less you might be able to physically do and enjoy. The younger you are at retirement, the less time you have to save money, the less you may get in Social Security and the longer you must support yourself through savings.

Once you've settled on an appropriate age, you must consider the lifestyle you want to live. If you want a glamorous lifestyle with expensive homes and vacations, you must have the savings set aside to support that lifestyle. The more moderate your post-retirement financial expectations are, the less money you need to have saved.

After you've figured out your personal balance between lifestyle expectations and retirement age, you'll be able to work on a budget that illustrates the amount you'll want saved before you take the leap. Remember to factor in living expenses, long-term care needs, possible prescriptions, healthcare, relocation costs and more. Include your Social Security income as well as the continued, conservative growth of your savings and employer-sponsored accounts. After all, you won't be emptying out your IRA or 401(k) the day you retire; you'll simply start taking distributions, thereby allowing the remaining balance to continue earning interest and investment growth.

When the time comes to actually retire, consult your employee handbook to find out what the requirements are in terms of giving your notice. Generally, you can expect to be asked to give two weeks to one month's notice in order to prepare your 401(k), profit sharing or other employer-sponsored plans. Your employer may also have a special seminar or meeting you need to attend in order to understand how your specific benefits work.

If you are 62 or older and you'd like to start receiving Social Security benefits, you can visit your local office to get the appropriate application form. Call your IRA custodian to get the appropriate forms to receive one-time or repeating distributions from your IRA, should you need them, and to set up your bank account for automatic deposits.

Finally, consider your healthcare needs. If you are age 64 and 9 months you should sign up for Medicare benefits; if you have a health savings account (HSA) call the custodian to find out how you can start taking distributions, once you are 65 and covered by Medicare.

RELATED FAQS
  1. How should I start saving for retirement on a low income?

    Our family's income is around $23,000 annually. We are in our late 40's and have no retirement. How should we start saving? ... Read Answer >>
  2. What is the best investing strategy for a 20 year old?

    I am a 20 year old college student with a spare $4,000 in savings that I am looking to put to work. I have had Johnson and ... Read Answer >>
  3. Is there a minimum I have to contribute to my 401(k) plan?

    Deciding how much to put into a 401(k) account can be tricky. There are guidelines to ensure you are investing what you need ... Read Answer >>
  4. Should I put money into a retirement account even if it isn't tax deductible?

    One of the biggest and most often-touted advantages of putting money into a retirement account is the tax savings that come ... Read Answer >>
  5. At what age will I be eligible for the maximum Social Security payout?

    The year you choose for collecting your social security will play a large part in determining how much money you'll receive ... Read Answer >>
  6. Why should I open an IRA?

    Understand the benefits of an IRA, how it enables you to increase retirement savings and how funds can be used before retirement ... Read Answer >>
Related Articles
  1. Retirement

    Saving For Retirement: The Quest For Success

    We'll show you how to set yourself up to retire in style.
  2. Retirement

    Top 3 Retirement Savings Tips For 55- To 64-Year-Olds

    Find ways to save money and increase your nest egg for the fast-approaching golden years.
  3. Retirement

    Build Your Own Retirement Plan

    A step-by-step guide to planning for your retirement. The sooner you start, the easier it will be to build a good cushion for your future.
  4. Financial Advisor

    Retirement Bliss? Not So fast: When Savings Lag

    Most people aren't saving enough for retirement. Here are some tips savers and financial advisors can use to change that.
  5. Retirement

    10 Retirement Savings Myths That Won’t Go Away

    If you’re confused about the different retirement investment vehicles or don’t know how to save for retirement, it’s important that you do your research.
  6. Retirement

    How Much Money Do You Need to Retire at 56?

    Who wouldn't want to retire early and enjoy the good life? The question is, "How much will it cost?" Here's a quick and dirty way to get an answer.
  7. Financial Advisor

    Retired? Tips for Spending Your Nest Egg Wisely

    It can be hard to start spending money once retirement finally comes. Here are some best practices on how to transition from being a saver to a spender.
  8. Retirement

    Managing Income During Retirement

    Learn some sensible strategies for making your hard-earned savings last for as long as you need them.
  9. Retirement

    The 10 Worst Financial Decisions You Can Make In Retirement

    In this time of fiscal uncertainty, there are many financial decisions that can make or break you during your formative years.
  10. Retirement

    Budgeting for the 4 Phases of Retirement

    Retirement consists of four stages, each with different expenses and different budgeting needs. Here's how to manage your money through them all.
RELATED TERMS
  1. Safe Withdrawal Rate (SWR) Method

    A method to determine how much retirees can withdraw from their ...
  2. Lifestyle Inflation

    Increasing your spending when your income goes up. Lifestyle ...
  3. Retirement Planning

    The process of determining retirement income goals and the actions ...
  4. Financial Health

    A term used to describe the state of one's personal financial ...
  5. Retirement Readiness

    The state and/or degree of being ready for retirement. Retirement ...
  6. Dynamic Updating

    A method of determining how much to withdraw from retirement ...
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center