Retirement Planning - Important Questions You Must Ask Yourself

The decision of how to handle your retirement is entirely yours. You can either develop a plan of action or leave the burden in the hands your children. One thing that is for sure is that every day that goes by we are all getting closer to our retirement; we are all aging.
On January 1, 2011 the first baby boomers turned 65 and they will start they next phase in life. In the past, retirement used to be blissfully perceived as being a delightful transition from a busy life filled with responsibilities and burdened with the costs of raising the children to the peaceful financial and physical freedom of retirement; how wonderful :)

The reality is that retirement has become for many a nightmare. We are living longer, many times outliving our savings, social security does not cover our retirement expenses, the cost of health care continues to increase at paces that were never imagined. Conclusion: The rules of the game has changed; retirement is not what it was for your parents.

Unfortunately, hope is not a viable strategy. The only solution is to properly plan for your retirement years. Currently with the new events in our economy many feel confused, even scared. However, "doing nothing" about it is the worse strategy you can take. Now more than ever your must plan for your elderly years. Once again the decision is yours on how you want to live those years.

Planning for your retirement doesn’t have to be hard, but there are a number of bases that you must have covered to accomplish success. To make sure that you are on the right track to seeing the retirement future you always dreamed of, there are a number of important questions that you will first want to ask yourself. The answers to these questions are important when developing a retirement savings plan.

1. What does retirement mean to you? Each person has their own definition of retirement. Some would slow down the amount of hours they are working right now. Some people may consider starting their own business, write a book, or become consultants. For others, retirement is taking over a new hobby, travel, and volunteering their time and resources to the mission(s) that are close to their heart. This question will define the amount of resources you need to sustain the lifestyle you want during retirement.

2. When do you want to retire? Your expected retirement date is critical since it represents your goal date. Based on your goal date your retirement savings plan will be determined. When setting this date, it is important to be realistic. The sooner you want to retire the sooner you must start building your funds to meet the lifestyle you defined in question number 1. Also, the earlier you want to retire (even if you plan to work part-time) the harder your retirement funds must work to ensure that they last for the duration of your retirement.

3. Am I making use of my company’s 401(k)? Are you employed? If so, do you have a 401(k) through your workplace? If you are employed full-time, you should. Are you contributing to your account? If not, this is a step that you must start taking now. It doesn’t matter whether you want to retire in 20 years or in 5 years, any bit of money that you can put aside will help. This is because your funds in your retirement funds are tax deferred. Also, if you are one of the lucky ones that still have a 401(k) with company matching (regardless of the amount) it will help you build up retirement funds on a tax deferred  basis. Company matching is "free money" being deposited in your account; you should consider maximizing this benefit.

4. Do you foresee any potential health problems? This is difficult question for many to address. I think we need to be honest with ourselves so our retirement planning be successful. Are you aware of family health problems?

5. Am I in debt? Once again, another difficult question but extremely important. If you are in debt, now is the time to start taking action. Debt can have a negative impact on your retirement goals and dreams. If the answer to this question is "Yes", now is the time to create a budget for yourself. The money that you are able to save can be spilt to repay your old debts, as well as add more money into your retirement savings.

These are not all of the possible questions to ask as part of your retirement planning. My goal here is to motivate you to take action. Now is the time to meet with you trusted financial advisor (whomever that person is; CPA, attorney, life insurance agent, etc) and develop a retirement savings plan. Your financial advisor can help you with tax aspects , financial projections, help you with the preparation of a budget, etc.

I hope you find this information help you. I welcome any ideas and questions you may have about this subject.