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Retirement Planning
Retirement planning is one of those "important" but not "urgent" endeavors
that all must face at some point. Like many tasks, the earlier you start,
the easier it is to achieve.
There are three main sources of available income during retirement years.
- Social Security
- Company Pensions
- Personal Savings (IRAs, 401(k)s, etc.)
Unfortunately, many workers who did not plan correctly for their retirement
have only option 1 available to them when they decide to retire or can no longer
work. The average social security check in 2002 was approximately $900 per
month or about $11,000 per year.
Only the largest companies are still providing pensions and the percentage of
American workers covered by pensions continues to fall.
This leaves personal savings as the primary vehicle for retirement planning
for the typical American. Accumulating enough savings requires planning,
belt-tightening and discipline. Success is more likely if the following
three rules are followed:
- Start early and allow the principle of compounding interest
to work for
you.
- Save beyond what your 401K allows. In many cases that alone
will not be enough.
- Invest wisely. Utilize asset allocation and rebalancing.
If you don't know how, get help.
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