Retirement planning

Farm Forum

As my retirement date gets closer it makes me nervous if I have done everything that I was supposed to do in life. I keep writing about what others should do and how sooner is always better that later, but yet it is never too late to start planning!

There are certain things that you can do to have a successful retirement.

First is to be out of debt. Hopefully you will no longer have a mortgage or school loan by this age. Pay off your credit card each month so that high interest debt does not linger.

Second is to have an emergency savings. It is recommended that you have three to six months of living expenses. And then don’t touch it, until the emergency arises.

Third is to have a budget. A budget or spending plan is essential for financial planning. It will keep you on track with everyday expenses and savings. You need to make sure that savings is one of your expense categories. You need to know where your money is going each month to find out if you have any spending leaks. It is recommended that you pay yourself first – which means to put savings in as a fixed expense. If you wait until the end of the month to see how much money is left and then put that away, the odds are, there will not be any.

Fourth is to have a financial plan. This will be your road map to retirement. Putting money away for retirement is where wise investing comes in. Calculate how much money you need for retirement. A rule of thumb is that you will need 80 percent of your current annual income.

Fifth is to use tax-favored retirement accounts. The government encourages saving for retirement with special accounts that give you tax breaks. Some employers also offer retirement accounts. Be sure to take advantage of these if offered.

Six is to start to save now. Like I said earlier, the sooner the better. If you have not started, it is never too late. Save what you can now rather than waiting to strike it rich. It is a process that takes time.

Seven is to take an appropriate amount of risk. You can invest at a higher risk as these investments will have a longer period of time to recover from any market volatility.

Eight is to set financial goals. To stay on track for retirement, you need to set goals in your financial plan.

Nine is to minimize fees. Minimize you investment fees by shopping for a low-cost custodian and search for low-cost investments.

Ten is to insure your ability to make money. Be sure you have insured your life and your ability to earn a living through a disability. The amount you pay for insurance is based on your age, occupation and income. You can buy as much insurance or as little as your budget will allow.

So remember it is never too late, or too early to start saving and investing for your retirement!

Reach Karen Slunecka at 605-626-2870 or