One of the best books ever written on general financial planning information.
The best steps to retirement planning start with making a plan. Not earth shattering advice but this is the step most people get wrong. It’s like a ship sailing around a harbor without a destination; that’s how many plan for retirement. So male a plan so you have an end goal to reach.
The next step is to become a little savvy and understand what a retirement plan involves. No, we are not talking about becomes a world renowned expert on the subject; just understand what it is you are about to do. Going in to talk to a retirement planning expert is a great move but we recommend you don’t do this until; you have researched what is available and know how retirement planning works.
This is crucial in understanding your adviser. Picking the right one comes down to figuring out who has your best interests at heart. Retirement planners are a dime a dozen; finding one who actually puts your retirement first and is working for you without thinking of their fee can be another matter.
A short PDF treport at analyzenow.com we came across caught our attention because of the fact it outlines retirement planning strategies at three different stages leading up to the big day; 15, 10 and 5 years before retirement. Take notice of the point about not broadcasting your retirement day date to anyone in the last section.
Ensure that you are saving enough of your income. At the least, use a good retirement planning program such as one from www.analyzenow.com. (Consumer Reports, Feb, 2011, rated the Free Retirement Planner on that site as the best free program, better than Vanguard and Fidelity which were also in the top three.) See a competent Certified Financial Planner (CFP) as well.
If you are not already financially savvy, start reading some financial material, but keep in mind that much of it likely has a financial bias to sell financial products that benefit the source. If you’ve been dabbling in individual stock purchases, stop. Get into broad, low-cost index funds. I like the writing of Larry Swedrow and John Bogle. An excellent book for a beginner is Getting Started in a Financially Secure Retirement, Wiley, 2007.
10 years before retiring:
Same as above, but add the following:
Make definitive plans when you should downsize your home if your retirement plan requires that you get equity from your house. The earlier you downsize, the better off you are likely to be in retirement. If you are going to move to a new location in retirement, you need to make plans for lots of first-hand, up-close research…..
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The best steps to retirement planning starts with making a plan and having an end target to reach. It is also about making adjustments along the way when needed and that’s what we liked about this report. It is not extensive, yet straight to the point and this is the type of stuff you can make a list from and talk to your retirement expert about.
Another great point in the report was to try living at least 12 months on the retirement budget you have planned and see how that works out. This could be at anytime and will give you a great insight as to what you can and cannot afford to do. Make sense?