Most parents put their children’s needs above their own, including funding their children’s educations. After all, everyone wants their children to be happy and successful. However, financial advisors that specialize in pension consulting warn that prioritizing your kids over your own retirement could be a mistake. Why should retirement be your main priority?
Planning for retirement can be complex, but retirement plan participants can simplify it by asking themselves three simple questions: What, where, and when? Retirement plan consultants feel that planning for your retirement now can help you make that transition later. You may spend 30 years or more in retirement, so you should think about how you want to use that time.
If your employer is a retirement plan sponsor, you’ve probably received information about your retirement plan, including descriptions of all the investment options available to you. Why do retirement plans offer different options?
Many people have different options to save for retirement. Virtually anyone can open an individual retirement account (IRA) and start saving. Many other people have access to a 401(k) plan through their employers. So which option is best for you?
If your employer is a retirement plan sponsor that offers access to a 401(k) plan, you should be taking advantage of it to save for retirement. 401(k)s offer significant advantages to workers, such as the ability to save on a tax-deferred basis and often, employer savings matches. However, most workers today will change jobs several times during their careers.
Many people who are saving for retirement haven’t taken the time to figure out how much they may need when they retire. Financial planners who do pension consulting point out that saving without a goal could leave you in trouble when you reach retirement. After all, how do you know if you’re saving enough if you don’t know how much you may need?
Saving for retirement is very important, but many people feel that they can’t spare the money to participate in a retirement plan or even create a basic savings account. Retirement plan consultants suggest that the first step is to create a budget. Once you figure out where your money is going, you can look for ways to save more.
For most people, a home is the biggest financial commitment they will make, so it’s important to carefully review your options when you’re thinking about making a change to your housing situation. Retirement plan consultants also note that your home will also generally be your largest asset when you retire, and that’s an important consideration for many people.
Sometimes people are surprised to find out they owe taxes on investments in their “tax-free” retirement accounts. It’s not common, but pension consultants note that it can happen.
Retirement is a whole new phase of life. You’ll experience many new things, and you’ll leave other things behind. One thing that won’t disappear, however, are taxes. If you’ve followed the advice of retirement plan consultants, you’re probably saving in tax-advantaged retirement accounts, like 401(k)s or IRAs.