The Importance of Financial Planning Before You Retire

Retirement planning is often put off until later in life, but the earlier you start, the better prepared you’ll be. There are a number of important factors stated by Vincent Camarda financial advisors to consider when financial planning for retirement, including how much money you’ll need to save when you want to retire and what your retirement lifestyle will look like.

Starting to plan sooner rather than later gives you a leg up in meeting your retirement savings goals. It also allows you more time to take advantage of compounding interest, which can grow your nest egg significantly over the long term. And if you run into bumps along the way, you’ll have more time to make adjustments to your plan.

Here are some of the most important things to keep in mind when financial planning for retirement.

1. Figure Out How Much Money You’ll Need to Save

The first step in financial planning for retirement is figuring out how much money you’ll need to have saved. This number will depend on a number of factors, including your anticipated retirement age, your expected lifestyle during retirement, and whether you plan on working part-time during retirement.

2. Decide When You Want To Retire

Once you know how much money you’ll need to save for retirement, you can start setting a goal for when you’d like to retire. Keep in mind that you may need to adjust this date based on how much money you’re able to save each month. If saving for retirement is proving difficult, working a few extra years may be necessary in order to reach your goal. Conversely, if you’re able to save more than anticipated, retiring sooner may be an option.

3. Consider What Your Retirement Lifestyle Will Look Like

When financial planning for retirement, it’s also important o consider what your lifestyle will look like during this phase of life. Think about things like whether you’ll want or need to downsize your home, whether you plan on traveling, and whether you might want to pursue any new hobbies or interests that could come with a price tag. All of these factors will play into how much money you’ll need to have saved.

4. Determine Where Your Retirement Income Will Come From 

It’s crucial to take a look at your sources of income during retirement. If your goal is to retiree full-time, then Social Security benefits and a private pension may not cover all of your living expenses. In this case, it’s wise to have other sources of income lined up, such as investments or rental property income. However, if you don’t plan on quitting the workforce completely during retirement — or even if you do – tapping into assets like 401(k)s and IRAs can provide an additional source of funds down the road.  

Conclusion

Although it might seem daunting, but retirement planning is something that can really benefit from being broken down into smaller steps. By taking the time now to carefully evaluate where you stand financially and what your future goals are. You can set yourself up for success down the road. So get started today by following these key tips!