Intro
Retirement is the complete withdrawal from one’s occupational position or from one’s daily, active functioning life. It occurs when a worker has accumulated a certain level of salary level for a definite period, and upon their death, an eligible beneficiary can receive that amount or value of money. In addition, an individual may also self-retire by reducing his/her work hours or working schedules. Self-rehabilitation can be done by reducing one’s financial obligations, enhancing one’s health, increasing one’s social interaction, or by any other method that increases job security.
Saving for Retirement
One of the factors that contribute to the increasing prevalence of Americans planning to retire is the current trend of the decreasing consumption of goods and services. As more people are forced to take on part-time jobs to supplement their salaries or are left without full-time work due to economic conditions, Americans are becoming more aware of the importance of saving for retirement. Moreover, people are starting to save for retirement even before they retire. The average American retirement account today is almost exactly what it was during the 1950s; with employers contributing more than half of the total amount earned by employees. Thus, many retirees are able to maintain their lifestyle even after they have retired from their jobs.
There are several retirement schemes available in the market for both the employed and the self-employed individuals. A number of retirement plans are provided by governmental or non-governmental organizations. Usually, the government provides its citizens with a guaranteed income supplement, known as Social Security, and an insured retirement benefit, known as Medicare. The latter is a government run program for senior citizens and it guarantees coverage for specific medical expenses. Another type of retirement plan available for the retirees is a Roth IRA retirement plan, which allows individuals to deposit tax-free funds into a special kind of IRA account, gaining a guaranteed minimum income during retirement.
Income at Retirement Age
Before you retire, it is important that you first determine your income at retirement age. You must have a rough idea of how much you will need to live on in order to sustain yourself after your retirement. Once you have determined how much income you will require, calculate the amount of income you have already earned and set aside some money for the unexpected expenses such as hospital bills, home improvement projects and insurance. Consider the possible increase in living costs after you retire – will it be enough to pay for these additional expenses? Most importantly, calculate the value of your life expectancy and determine how much income you will require once you retire. If you die prematurely, you will incur expenses even after your retirement.
In your retirement planning, remember not to spend all your savings for the immediate needs, but rather save some income for the uncertain times ahead. Consider opening a mutual fund account, investing in stock markets or real estate or creating a special fund consisting of bonds, gold and cash. You can also opt for tax-deferred investments such as CDs. Remember that the earlier you start saving money for the post-retirement period, the more tax-deferred your income is.
Insurance Policies
One thing to keep in mind when saving for retirement is to get all your insurance policies in the same institution. This will make it easier for you to access your retirement savings account without any hassles. Your retirement savings plan should ideally be linked with the employers’ retirement plan, so that the same funds can be used for both the accounts. This will help you avoid duplication of expenses on the accounts. Finally, make sure you check if your employer pension plan offers any kind of flexible savings option such as investment options, roll-over balance.
