Retirement planning is important whether you are 20 or 50. If you are just starting out in the world of work the best advice you can receive is to allocate a certain percentage of you gross income for retirement.
Here is some general advice for planning for your retirement
- Take advantage of employee sponsored 401k plans. Often times employers will match to a certain percentage, and you can declare your investment pre-tax.
- If your employer does not offer a 401k or you are self employed do not despair, you can contribute to a traditional IRA which can be deducted from your gross income.
- Strongly consider investing some of your money in a Roth IRA.
- Do not count solely on social security as your only form of retirement income.
- Consider maxing out your allowable retirement contributions if you are over 50. Especially if you have not been diligent in saving for your retirement in the early years.
- Make sure you will have your home paid free and clear by the time you retire.
How much will it take to retire?
Many sources estimate that it will require 70-80% of your gross income to retire. Social Security is only likely to cover 45-60% of that amount. If you are in a higher income bracket this percentage could be even lower.
Our free Excel spreadsheet pFin, has an estimator that allow you to plan for retirement.