A financially secure retirement plan takes a lot of time and planning. The planning process can be confusing and overwhelming at the start. Having the right checklist can help you prepare ahead of time and even plan for any unpredictable circumstances.
Steps to plan for retirement
- Check your income sources for retirement
You need to first make sure that you will have enough money for you to opt for retirement. Firstly, you need to make sure you handle your debt from any previous loans or mortgages. After retirement, paying loans without a steady income will not be possible. Some retirement income sources are:
- Social security: The estimation of the social security benefits, earning statement and Medical taxes that you have paid are provided on the “my social security” website. Eventually you can collect social security such as retirement, and disability and survivor benefits when you retire at full retirement age, suffered the death of a spouse or are disabled.
- Life insurance values
- Savings accounts
- Stocks and bonds
- Real estate and property
- Find out how your retirement income is going to be taxed
The value of the retirement benefits is not the actual money that you will receive in hand, it is taxable. Social security benefits and 403b plans are all taxable according to the tax bracket you fall into. Furthermore, if your employer has sponsored you to invest in a 401k, that withdrawal is taxable too.
- Determine your retirement expenses
After retirement income, comes expenses. The amount you need depends on your spending on housing, health care, insurance, leisure expense, etc. Stay realistic about your budget to avoid problems in the future.
- Setting a retirement date
A date for retirement can only set once you are financially and emotionally stable. Your income sources must support your lifestyle and your mind must also be set to stop working and stay home.
Retirement planning firstly requires carefully analyzing your income and expenses. Moreover, it also requires you to prepare your mindset to stop your daily working habits and staying home.