The Basics of Retirement Planning

April 29, 2021

It’s never too early to create your retirement plan. If you haven’t considered a retirement strategy by now, it’s time to get started. Typically, you’ll invest more aggressively (greater risk and reward) when you’re young; as you mature you’ll move away from aggressive investments to more conservative options. You can comfortably retire when you’ve saved enough money to replace your earned income stream from working. This is part one of HereToday’s retirement series.

This brief overview will explore five considerations to retirement planning, which include: 1. starting date, 2. determining how much money you’ll need for retirement, 3. setting realistic goals, 4. investment options, and 5. investment selections.

1. When should you start saving for retirement?

The simple answer is now. While it’s never too late to start saving for retirement, the optimized time to start is in your 20s. A financial advisor can help you craft a plan that optimizes every dollar allocated towards savings. You can upload the retirement plans to your Vault’s Financial folder.

  • If your company offers a pre-tax 401(k) savings program, take it!
    • Non-profit organizations, schools, and government employees can be offered an applicable 403(b) program.

2. Determine how much money you’ll need for retirement.

A good way to estimate the amount of money you’ll need for retirement is to examine your current circumstances. Take your present monthly income, recurring and anticipated expenses, and explore how these figures will change in retirement. Most financial advisors will suggest you need to replace 70% or more of your annual income through a combination of social security and savings. 

Good to Know: 

  • You can start claiming Social Security benefits at age 62. 
    • If you file early you’ll sacrifice a portion of your benefits. 
  • If you were born in 1960 or later, your full retirement age is 67. 
    • Increase your benefits by delaying retirement to age 70.

3. Realistic financial goals

Like many people, you’re probably carrying credit card debt, paying off student loans, or even saving for your children’s college fund. Setting realistic financial goals is best practiced at this time. Run your personal finances like a business; most importantly, don’t get depressed by the weight of the situation. You need to be methodical and set aside funds for retirement, no matter how little, while also paying off debt at the same time. Every dollar saved now could be worth exponentially more at your time of retirement. You can do it!

4. What’s the best retirement plan for you?

There are a lot of investment options to consider. One of the most common plans is the 401(k), an employer sponsored plan. These plans are usually offered by large, for-profit organizations. At some employers they’ll match, or offer a percentage match, of the monthly funds you contribute to your plan. If your employer doesn’t offer a 401(k), you can always open your own retirement account. Check with your employer for retirement program specifics.

The difference between a 401(k) and 403(b)

A 403(b) retirement plan can be offered to employees working at tax-exempt or not-for-profit organizations (like schools, educational institutions or hospitals), while 401(k) plans are offered to employees at for-profit corporations.

You can also combine different retirement accounts, such as adding an individual retirement account (IRA) to your program. An IRA allows you to save money for retirement in a tax-advantaged way. You can save for retirement with tax-free growth, or on a tax-deferred basis. With an IRA you can open the account by yourself through an online brokerage, or through a financial advisor, so it won’t be linked to your employment.

Here’s a sample of retirement plans that might best fit your needs. 

  • 401(k)
  • 403(b)
  • Solo 401(k)
  • Roth IRA
  • Traditional IRA
  • Self-directed IRA
  • Simple IRA
  • Cash-balance plan
  • Guaranteed income annuities (GIAs)
  • Pension plan
  • Profit-sharing plan

5. Investment Selection

Retirement investing can encompass a range of options, including mutual funds, stocks, and bonds. Your age and risk tolerance will determine the appropriate mix of investments. As stated previously, you’ll invest aggressively when you’re young and starting a career; over time you’ll move into more conservative investments. The rationale is that by starting young, your investments will better absorb any market fluctuations over the years. Be prepared to adjust the investment strategy as your life situations change, such as aging, marriage, and children become part of the equation. 

HereToday – Investment Information

Investment information provided on this page is for educational purposes only. HereToday does not offer advisory or brokerage services.


Disclaimer. HereToday is not a legal service. This content should not be taken as legal advice. Before drafting any legal document, please consult an attorney.

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