If you are hoping to retire comfortably, you will certainly need more than a 401k and your Social Security benefits. It is nearly impossible for most of us to be adequately prepared for retirement, depending solely on government benefits. After your retirement plan has been created, the planning is not really over. It is also important to update a retirement plan to ensure that all of your changing needs will be met.
When to update a retirement plan?
The best way to stay updated is to review your retirement plan once a year, to ensure that your needs and wishes have not changed. However, if a major change occurs at any point during your lifetime, you should review your retirement plan again. For instance, whenever there is a significant change in your financial situation, good or bad, you should review your retirement plan. Any substantial purchase of property, especially real estate, will likely require revisions, as well.
Another example of a significant event that typically requires revision of a retirement plan is when your beneficiaries change. When you establish an IRA, 401K or insurance policy, you must designate beneficiaries to receive the proceeds from these accounts upon your death. If one of your beneficiaries dies, or if there is a new heir to be included, you will need to make appropriate changes to your beneficiary designations. This is another reason to update a retirement plan.
Retirement planning is a multi-step process
In reality, the best way to plan for retirement is to do so in stages. Initial retirement planning, which is typically not very detailed, can begin when you are in your mid-thirties. The goal, at this point, is to start figuring out when you want to retire. That will make it easier to estimate how much money you will likely need. Starting early also helps you to determine whether or not your goals are realistic.
Once you reach your mid-forties, you will have a better grasp of your overall financial situation. You can now start considering whether you plan to find somewhere to settle down, or travel around the country or the world. Your goals now should be more concrete, as you will be in a better position to predict how much money you should have once you retire.
Focus on your investments and maintain your nest egg
The final step in your retirement plan will usually take place in your fifties. At that point, you will need to examine each of your investments and, if necessary, transfer them to safer and more stable investment products. Growing your investments is now less critical than trying to hold on to the money you have earned and saved. Now, you will also be able to determine your eligibility with regard to retirement benefits. The age you begin to start receiving disbursements will affect how your retirement plan actually works.
Is early retirement possible?
It depends on your plan, and how early you want to retire. The longer you wait to start collecting Social Security, the more your monthly payments will be. The earliest you can collect Social Security benefits is age 62. However, you cannot receive your “full” retirement benefits until “full retirement age,” which is currently 67, if you were born in 1960 or later.
If you have questions regarding updates, revisions, or any other retirement planning needs, please contact Wilcox Attorneys, PA online or by calling us at (479) 443-0062.
- Estate Planning is Essential Whether You Are Married or Not - April 25, 2018
- Income Tax Basis in Estate Planning – Part 2 - April 23, 2018
- The Downsizing Generation: How to Handle a Surplus of Stuff When a Loved One Ages - April 18, 2018