Retirement planning tips have become the most important part of personal finance, for all generations. That’s because members of Generations X, Y, and Z observe how too many Baby Boomers who want to stop working cannot afford to. According to the U.S. Department of Labor, less than 50 percent of Americans have any notion how much they need to retire.
Here are what might be called the Seven Habits of Successfully Retired Men and Women:
Establish a Goal
Continued economic disruption is no excuse for not determining goals for post-working years. Certainly, those could be upended by unexpected financial events. However, not mapping out the best-scenario for the future discourages taking the concrete steps for maximizing income in retirement.
From the earnings for mowing lawns to the tax return from Uncle Sam, a portion should not be spent. When that pattern is developed early and adhered to, it becomes possible to retire when workers and business owners want to.
Participate in Employer and Individual Retirement Plans
Shockingly, about a third of employees whose organizations have retirement plans don’t contribute, documents the Labor Department. That’s despite the tax advantages. Also, whether an employee or self-employed, there also exist vehicles such as IRAs, which provide tax advantages.
Money hidden under the mattress loses value, even in low-inflation times such as the present. At the very least, deposit the funds in saving accounts in which interest is compounded. Those concerned about protecting the principal can invest in vehicles such as certificates of deposit (CDs). Investing in mutual funds spreads the risk. However, research shows that purchasing a diverse set of equities is the best approach for long-term return on capital.
A financial crisis demands even more caution and strategy than does routine financial planning. In her landmark book Confidence, Harvard Business School professor Rosabeth Kanter identified panic as the primary cause of downward trajectories and the inability to stabilize and turn around the situation.
Minimize Premature Withdraws from Retirement Funds
There are both financial responsibilities, such as helping a child attend college, and emergencies, such as medical bills. However, set limits on how much will be “borrowed” from retirement money. In addition to a depleted fund, there are usually tax penalties.
Avoid Educational Loan Debt
Co-signing a child’s or spouse’s student loans or taking on one for yourself later in life is an obligation that usually cannot be discharged even in bankruptcy. In addition, lenders have the legal right to tap into entitlements such as Social Security to be repaid.
A comfortable retirement on one’s own terms and conditions is still part of the American Dream. The only difference in these times of a changing economy is that ensuring that requires developing the retirement planning tips or habits of planning, saving, participating in retirement accounts, investing, never resorting to panic, minimizing withdrawals from savings, and caution with student debt.