By: Darcy Bergen
While there are a number of financial planning methods that seniors can use to optimize their assets, planning for retirement makes sense for people at all stages of their careers. Planning for retirement starts with simple saving; the larger your nest egg is, the more it can grow over time. Whether you invest your money or simply bank it, your funds grow over time, enabling a more secure retirement.
Many people base their ideas about their financial needs for retirement on outdated models. Consider how you want to live, and then set expectations about how much it will cost. For some people, this might mean moving to a different part of the country or simply an area in the region with a lower cost of living.
Employers often offer their staff the option of saving money for retirement via a 401(k) plan. This simple mechanism, which is usually accompanied by some level of matching contribution from the company, gives those saving for retirement such benefits as tax deductions on top of a steadily growing account. An IRA also delivers tax breaks while at the same time allowing for significant retirement savings. With a traditional IRA, you only pay taxes if you withdraw from the account; in addition, you get a tax deduction on the money you contribute to the plan. A Roth IRA allows investors to withdraw money without paying taxes, but does not provide a tax deduction on funds that are deposited.
Another important factor in planning for retirement lies in the allocation of your portfolio. Remember that stocks generate growth over the long term, while bonds provide the advantage of stability.
Because of the intricacies of planning for retirement, many people turn to an experienced financial planner. Working with a retirement specialist offers individuals the opportunity to enjoy the benefits of professional expertise.