If You Fail to Plan…

Benjamin Franklin had it right when he said “If you fail to plan, you are planning to fail.” But don’t be discouraged, it is never too late to start planning for retirement!

Obviously, the earlier you start the better.  Here are some planning tips for YOUR stage in life, whether you are in your  20’s, 30’s, 40’s, 50’s, 60’s, and we are here to help.  Get started today and contact us at 407-869-9800 or click here to schedule your complimentary visit.

Retirement Planning for 20-somethings

It’s easy to understand why retirement doesn’t loom large on the horizon for 20-somethings. Young workers are more concerned with kick-starting careers, not ending them in the long-distant future.

But it’s worth noting that the very fact that you’re young gives you a huge edge if you want to be rich in retirement. That’s because when you’re in your 20s, you can invest relatively little for a short period and wind up with far more money than someone older who saves much more over a longer period.

Consider this scenario: If you begin saving for retirement at 25, putting away $2,000 a year for just 40 years, you’ll have around $560,000, assuming earnings grow at 8 percent annually. Now, let’s say you wait until you’re 35 to start saving. You put away the same $2,000 a year, but for three decades instead, and earnings grow at 8 percent a year. When you’re 65 you’ll wind up with around $245,000 — less than half the money.

Seems like a no-brainer, right? Save a little now and reap big rewards later.

Unfortunately, many of today’s youngest workers pass on the opportunity to save for retirement early, when the beauty of compounding interest can work its magic and maximize savings. A recent study by human resources consultant Hewitt Associates found that just 31 percent of Generation Y workers (those born in 1978 or later, now in the thick of their 20s) who are eligible to put money into a 401(k) retirement savings plan to do so. That’s less than half of the 63 percent of workers between ages 26 and 41 who do invest in employer-sponsored savings accounts.

How to kick-start your retirement savings:

  • Start saving ASAP
  • Sign up for that 401(k)
  • Use a Roth
  • Be aggressive
  • Get educated
  • Build an emergency stash
  • Avoid debt

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Retirement planning for the 30-somethings

Even in you’re 30s, retirement planning is still probably not at the forefront of your mind. After all, it’s at least 30 years away, and you likely have more immediate concerns, such as paying off student loans, saving for a house or starting a family.

The earlier you start planning your retirement, however, the better your chances of being able to retire when and how you want. Regardless of your current situation, you should be thinking about your future now and taking steps to secure it. Here are 10 ways you can set your retirement plan in motion.

1. Condition yourself to save.
2. Set aside enough money.
3. Choose wisely.
4. Don’t time the market.
5. Pay off debt.
6. Open a Roth IRA.
7. Learn to ask for a raise.
8. Have a vision as a couple.
9. Maximize your employee benefits.
10. Get professional help.

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Retirement Planning for the 40-somethings

If you’re in your 40s, you could be considered either a late baby boomer or a member of Generation X. Either way, you’re at a time in your life when you’re putting youth aside and should be doing some financial planning for your future and your family’s future.

A dilemma faced by people in their 40s is that they typically need to be saving for college tuition for their kids and putting money into a retirement account while simultaneously buying a house or saving for a down payment. Financial experts can help you sort out where your savings should be going in your 40s.

“Not having a financial plan is actually just having a really bad plan,” says Alexa von Tobel, founder and CEO of LearnVest.com in New York. “Every financial plan is specific to the individual, but you should look at your income and set priorities for paying off debt and saving for different needs.”

These financial planning tips are meant to help 40-somethings find balance in their hectic lives of spending and debt.

1. Build up your cash reserves.
2. Reduce your debt.
3. Max out your employee benefits.
4. Make your own retirement plans.
5. Save for college tuition.
6. Insure your family.

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Retirement Planning for the 50-somethings

Focus on the finish line. It’s time to get serious about saving, and maybe cutting costs.

At this point, retirement isn’t a far-off goal you’ll worry about someday when you’re ready for your second hip replacement. Unless you plan to work until you drop, retirement is staring you in the face.

That means it’s time to get deadly serious about saving, especially if you haven’t saved enough. And that’s true for most people: Nearly a third of Americans age 55 and older have saved less than $10,000 for retirement, according to the Employee Benefit Research Institute. Only 22% have saved $250,000 or more.

With any luck, though, these are still your prime earning years, and some of your major expenses — such as a down payment on a home and college tui­tion — are behind you. “With our clients, the last ten years that they work is when they save the most money,” says Mark Bass, a certified financial planner in Lubbock, Tex. To make sure you’re on track, don’t hesitate to seek help from a financial planner or use the many resources available on the Internet.

1. Take advantage of catch-up contributions.
2. Dare to downsize.
3. Consolidate your orphaned 401(k) plans.
4. Consider long-term care insurance.
5. Weigh your Social Security options.
6. Reassess what you’ll spend in retirement.

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Retirement Planning for the 60-somethings

Odds are that you’re an anything but average, but for a moment, let’s pretend you are. And, if we pretend you’re an average 60-year-old with a 401(k) plan, we may surmise that you don’t have enough saved for retirement.

According to a recent study by the Employee Benefit Research Institute and the Investment Company Institute, 401(k) participants in their 60s had an average account balance of $144,000 at the end of 2009. Workers in their 60s who have been participating in the same 401(k) plan for more than 30 years have on average $197,472 in their plan.

Those numbers don’t tell the whole story. They include only what that average worker has socked away in his current employer’s 401(k) plan, and none of the money that he might have in a former employer’s plan. It doesn’t include any money in IRAs, Roth IRAs, or taxable accounts. And it doesn’t reflect how much money a worker’s spouse might have set aside for retirement.

“It’s so hard to judge retirement adequacy with one statistic like this,” said Stephen Utkus, a principal with the Vanguard Center for Retirement Research.

Nonetheless, assuming you look a little bit like the average worker in your 60s with a 401(k) plan, you should be do at least four things now.

1. Build a bigger nest egg.
2. Check your asset allocation.
3. Delay retirement.
4. Delay taking Social Security.

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