Financial planning for retirement is extremely important and is something that needs to be planned for throughout your life. There are many aspects to take into consideration when planning for your retirement and these will impact the success of your retirement investing. You will need to consider at what age you plan to retire, where you plan to live, known medical expenses, vacation plans and more. While following popular rules of thumb, such as that you need twenty times your gross annual income or you need to save 10 percent of your pre-tax income, are useful, there are a few simple rules that you can follow that will help you succeed in your retirement investing.
- Take Advantage of Your Retirement Investment Options – To take advantage of your retirement investment options, you need to understand the options that are available to you. Some of these are available via your employer, while others will be available through the bank. Look at the risk/reward relationship of the various options and pick higher risk options when you are younger, reducing risk as you get older.
- Begin Your Retirement Investing as Soon as You Start Earning – It is never too early to start investing for your retirement. The earlier you start, the more you can save and if your investment takes a hit when you invest young, you will have plenty of time to recover. With more experience and more time to invest you will be able to research the best retirement investments to suit your needs.
- Make Fees Important – Many people focus on their deposits and returns, while ignoring the fees they are paying. These fees can erode your potential savings and should not be overlooked. Work out how much you are spending and find an investment solution that will cost less.
- Regularly Calculate Your Net Worth – To be successful in retirement investing, you need to know how much you need in your retirement investments to be able to retire. The best way to keep track of this is by calculating your net worth regularly. Your net worth is all your assets (cash, property such as houses as well as jewelry, and investments) minus your liabilities (what you owe – debts, mortgages etc.). Calculating your net worth tells you where you stand financially right now and how far you must reach your goal. You can’t reach a goal you never set so work out when you want to retire, how much money you will need and your net worth to be successful in your investments towards your retirement.
- Find Help if You Need it – The surest way to succeed in retirement investing is to know what you are doing. If you don’t know, get help. There are plenty of professionals out there who will be able to steer you in the right direction and clearly explain your options. Spending a little time, and even money, getting help can save you lots of money for your retirement.