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Retirement Planning in Three Easy Steps

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Many details go into a retirement plan, but they shouldn't bog you down

Retirement planning is a process you should be engaging with your entire working life — and beyond — but if you haven’t taken these basic steps, you’re already sunk.

1. Know where you want to go

What do you want your retirement to look like? Do you want to travel? Have a house big enough for kids and grandkids to visit? The things you want to have and experience when you wrap up your career are the single biggest factor in determining how you should structure your retirement plan, and should be the first step anybody takes.

AARP’s Donna Fuscaldo recommends making a list of goals and objectives you envision for your retirement.

“For now, don't focus on budget. Focus on ideas, and be as specific as you can,” she says. “Try to limit the list to your top five goals. Make sure all your financial needs are met as you brainstorm. The more descriptive you are, the more tangible your retirement will be. This will help keep you focused on a realistic set of goals, which will make each of them more attainable.”

Once you have your ideas down and a basic idea of how you can fund them and what you’ll need in terms of savings and retirement income, the real work of getting a retirement plan in order can begin.

2. Know what you have

If Step 1 helps you figure out where the finish line is, Step 2 is about describing where you’re starting. Taking an accurate accounting of your assets, your income, and whatever retirement payments you might have already earned should be the next step in your retirement plan.

“Organize the paperwork and online files regarding all of your retirement resources, such as 401(k) balances, insurance, and statements regarding pensions and Social Security,” writes Steve Vernon for CBS MoneyWatch. “You'll use this information to help you determine just how much more you need and what you'll have to do to get it.”

The money you’ve saved, the amount you’re earning and the money you can be reasonably sure you’ll be getting in the future from pensions and Social Security, are the foundation of your future retirement plan. With these basic building blocks in place, you can start the fine-tuning for real retirement power.

3. Plan, budget, evaluate

There are, of course, many steps involved in crafting a detailed and practical retirement plan. When you know where you’re going and what you have to start with, though, the only thing left is figuring out how to best go the distance. This means looking at all available retirement vehicles, gauging what portfolio gives you the greatest potential for meeting your goals and regularly reassessing your finances and progress.

“Early on, you will spend less on work-related things like transportation and clothing,” write the experts at the US Department of Labor. “As you age, it is likely that more of your budget will go toward medical expenses. People may find that recording their expenses will alter future spending patterns.”

Plan your spending along with your retirement income and savings, and you’ll be set for a long and well-funded retirement. Be sure to contact us today.

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