These Simple Steps Can Help You With Financial Planning
Financial planning can be difficult and confusing. Financial planning for retirement can be that much harder, especially when the payoff seems distant and out of reach. Regardless, be sure to start early and take advantage of all the benefits your employer might offer. For successful retirement planning follow these useful tips.
1. Start Early & Save
This is essential. The earlier you start saving, the less you’ll need to save per month to maintain your standard of living. Over time, interest will make these early contributions extremely profitable even if they were small originally. If you can’t contribute much in the beginning, starting early will give your money time to grow.
2. Contribute To Your Company’s Retirement Savings Plan
Many employers offer retirement financial planning in the form of a 401(k). If your office does, sign up immediately and start contributing. Your taxes will be lower, your employer might match your contributions, and automatic deductions from your paycheck make the whole process easy. Compound interest and tax deferrals from these employer programs will help when building your retirement fund.
3. Know Your Retirement Needs
It’s estimated that on average you need about 70% of your pre-retirement income to sustain your standard of living. While this may seem high, you’ll probably need more money than you think. Thanks to rising retirement expenses and longer life expectancy, the money needed to retire is only increasing. To help with this, try to save as much as you can in your working years and at least 15% of your gross pay. If this isn’t possible, increase your retirement savings contribution with every pay raise.
4. You Can’t Predict The Future—Be Prepared
To save yourself from worry and undue stress, be insured. You can’t predict the future and, inevitably, unexpected events will occur. You might fall sick and be hospitalized or your house could catch on fire and be destroyed. Either event keeps you from contributing to your retirement fund by depleting your income. Insurance, like homeowners insurance or life insurance, can act as a safety network in times like these. With sufficient protection you can continue to plan for your future without having to constantly worry about the “what if’s”.
5. Don’t Touch Your Savings
No matter what happens, do not touch your savings. If you take them out you face withdrawal fees and miss out on interest your money could have been accumulating. If you change jobs there is no need to withdraw your savings as your money can simply roll over to your new employer’s plan or be transferred to an individual retirement plan (IRA).
Plan For Your Future With Financial Planning
Planning for and filing taxes can often be pushed to the wayside. Everyone wants to be more proactive with their taxes, but instead they often create unnecessary stress. We can help you avoid this. With over a decade of experience serving the San Jose area, we can make sure there are no surprises when you’re filing for your tax returns.