6 Easy Steps toward Planning a Successful (Affordable) Retirement

by Frugal Brian

For many of us it becomes the most exciting and highly anticipated time of our lives! Retirement is the beginning of a whole new phase of our life and should be well prepared for so we can actually enjoy ourselves instead of fearing we can’t afford all that free time. A well planned out retirement is what we all aspire to and if done carefully, will insure we don’t run out of money before we run out of days of our lives! Social security is not all it’s cracked up to be and few of us want to depend on a “fixed” income for the remainder of our lives so having a pension, annuities, investments, and especially good health insurance are necessary for that comfortable and satisfying retirement. Remember you can never begin planning your retirement soon enough! Here are a few good suggestions regarding planning for that exciting time of our lives.

1) Planning for retirement begins with the very first job

While it may seem unnecessary to think of retiring when we start our first job, perhaps right out of high school… that is the best time to start preparing for life without a 9 to 5 job. If you can, work for a company that offers a pension plan and invest in it. Even if you leave that job your pension most likely will follow you through your years of employment elsewhere. Even a small pension will help when it’s all added up when you reach 65 or so. 401K plans, IRA’s, profit sharing, and savings accounts will grow over the years and give you a sizable income that can see you through your “golden” years. Begin saving $50 or $100 each payday if you can and see how quickly that will grow into thousands! You can choose between a standard IRA (Individual Retirement Account) and a Roth IRA. The basic difference is the money invested into a Roth plan is not tax deductable while the traditional IRA will be taxed to an extent.

2) Insurance policies can work for you

The key to life insurance is to buy while you are young! As we age insurers tend to raise the rates tremendously so the time to buy is while you’re young, healthy, and considered a good risk. Whole life or term life is expensive but considered an investment that can pay you back in time. Straight insurance will pay when you die but that won’t be of help to you as you retire, it will just help your family once you’re gone. Health insurance is, of course, something we all must have to help with expenses such as dentist bills, doctor’s fees, hospital bills, and vision care.

3) Disability is a “just in case” plan

When we are in our 20’s or 30’s we never think about becoming disabled. That’s something for the elderly to contend with. But accidents and health issues do happen so we need to be prepared by having disability insurance. Your job should provide a good plan, many of which are paid for by your employer. Keep it up because you never know what may happen down life’s road.

4) Having a fall back plan always helps!

Suppose your spouse dies before you. Do you know where all those valuable papers are? Did you or your spouse handle the paperwork and details of insurance, investments, and pension plans? This should be dealt with early one but many do not plan ahead with the planning or the execution of such important matters as how is your home’s title ownership worded. Is it in the husband’s name only or is it titled with a “transfer upon death” clause? The same for automobiles you may own and bank accounts. You absolutely must know where each legal document is located and you need to have them properly titled so there won’t be complications later on. This is well worth a visit to an attorney to insure each of your investments is transferrable easily. Most people will be able to avoid the high expenses of probate if all their titles are in order.

5) Homeowners have the advantage but also the responsibilities

Upon retirement your home may well be the best asset you have but with it comes responsibility. If you’ve been lucky enough to pay off your mortgage you will only need to pay the taxes and insurance for your residence and those go on forever! Do keep up your homeowners insurance because a fire could soon make you homeless! Taxes are inevitable and must be paid or you will lose your home for back taxes owed. The good news is these items are a handy tax deduction if you must pay taxes.

6) Here’s a handy list of documents and important reminders

Keep track of the following documents and fees so when you need them they can be found (many people simply forget the location of some documents):

  • A will for each spouse (notarized and signed)
  • Life insurance policies for each spouse
  • Any prearranged funeral plans
  • Birth certificates
  • Social Security cards
  • Mortgage papers (including payoff if  applicable)
  • Deeds to personal property including insurance policies
  • Vehicle titles along with proof of insurance
  • Birth certificates for each spouse
  • Death certificate (when the time comes)
  • Any retirement plans, stock certificates, and related documents
  • Tax returns (past 5-7 years or longer if possible)
  • Brokerage statements
  • Pension plan information and any necessary documentation
  • All loan paperwork, leases, partnership agreements, divorce papers
  • Safe deposit box information and keys
  • Current bank statements (past 1-2 years if possible)
  • Current bills owed (statements for the past year at least)

If possible keep everything that appears at all legal and you won’t go wrong! Store all vital papers in a safety deposit box and have several keys (give one to each of your adult children with directions as to how to get to it when the time comes). Planning ahead is absolutely vital for your secure comfortable retirement!

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