Retirement Planning — The Basics
You may have a very idealistic vision of retirement — doing all of the things that you never seem to have time to do now. But how do you pursue that vision? Social Security may be around when you retire, but the benefit that you get from Uncle Sam may not provide enough income for your retirement years. To make matters worse, few employers today offer a traditional company pension plan that guarantees you a specific income at retirement. On top of that, people are living longer and must find ways to fund those additional years of retirement. Such eye-opening facts mean that sound retirement planning is critical.
But there's good news: Retirement planning is easier than it used to be, thanks to the many tools and resources available. Here are some basic steps to help get you started.
Determine your retirement income needs
It's common to discuss desired annual retirement income as a percentage of your current income. Depending on whom you're talking to, that percentage could be anywhere from 60% to 90%, or even more. The appeal of this approach lies in its simplicity. The problem, however, is that is doesn't account for your specific situation. To determine your specific needs, you may want to estimate your annual retirement expenses.