Thousands of Baby Boomers celebrate their 60th birthday every day, yet research shows that a large majority of these individuals are not financially prepared for retirement
It is not easy to survive in a modern world. It goes without saying about retirement years when you will not be able to work hard and earn money for living.
How much retirement income will you need?
Government research has established that most Americans need between 60 and 80 percent of pre-retirement income to maintain their standard of living during retirement.
How much income you need during retirement will be a function of your goals, time horizon, and spending habits. Obviously, anyone who wants a holiday home or travel will often need more than those who prefer to stay home. Some questions are:
- Your support of the children or grandchildren will continue after retirement?
- Would you like to travel or holidays in retirement?
- Mortgage will be paid off before or immediately after retirement?
- What will your tax bill is retirement?
- Sources of retirement income
After evaluating your needs during retirement, start working on your potential income sources. In general, your sources of income fall into one of three categories:
1) Sources of government. The social security system was created during the Great Depression to supplement pension income. Today, most experts question whether the system remains solvent throughout the 21st century at current benefit levels. A retirement plan should be a potential increase in retirement age or cut benefits to reduce your monthly Social Security check.
2) Plans by employers. Many employers offer pension plans sponsored by companies, which generally fall into two categories. defined benefit plans, which are normally financed by the employer and ensure a retirement benefit based on a formula that includes several years in the workplace and occupational income. For example, a traditional pension is a defined benefit plan. The employee has an account balance (subject to business rules relating to vesting) contributions and earnings and assumes the investment risk.
3) Personal savings is probably the most overlooked aspect of retirement planning. personal savings may include the balances in savings accounts held directly, heritage home, shares in a company of people or businesses, and could also understand how works of art collectors and antique coins.
Preparations for retirement are very important
If you failed to save enough you will have to change your lifestyle and live a more moderate life. So, start saving early in your youth.
No matter what retirement investment tools you choose make sure they are safe. Losing your pension finds is definitely not a good thing. Avoid scams and frauds that have become very popular these days. Also, consult specialists and talk to your family and friends.