Retire Happy: Keys to Reaching that Goal
Posted March 28, 2011 by Bernz
Every one who is working looks forward to the goal of one day retiring with enough money set aside so that they can truly enjoy themselves during retirement. If this is your goal then you need to determine now the kind of funds you need to have on hand to enjoy your dreams during retirement. Some people convince themselves that they cannot see the world or build their dream home when they retire, but this is really short-sighted and with careful planning you can reach those and a number of other goals.
One big key is to start saving now. Ideally a person should begin saving in their 20′s in order to have enough personal savings set aside by the time that they retire to live comfortably. The more you can save the better, and looking for ways to reduce your spending while you are younger to save more for the future can really pay off in the long run. Setting aside 10 percent of every check in a savings account with a fairly aggressive compound interest rate, and then leaving the money alone, a very important key to financial success, can result in a very impressive nest egg when retirement rolls around.
If you are looking to grow your savings more aggressively there are a number of financial instruments that can be used to accomplish that goal. Tax-deferred retirement accounts allow you to avoid paying income taxes on the money you save until you actually start withdrawing the money. It is important to read the fine print before you start investing in tax-deferred financial instruments, since there are cases where the taxes you end up paying after you begin to withdraw the money can outweigh the initial savings of the tax deferment.
As you age your retirement savings plan should evolve. Protecting the money that you have earned and saved over the years becomes a more pertinent issue as you get closer to retirement age. This does not mean that you completely eliminate investment in the stock market, but as you approach 65 there should be a shift to financial instruments that offer more protection of savings including bonds. With this goal in mind several investment firms offer what is known as target-date investment funds, which diversify your investments with the goal of maximizing profits and reducing risk until you reach retirement. The planning that goes into allocating your money so that you can retire the way you want is definitely time well spent.
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