8 Shortcuts to a Simple Retirement Plan in Record Time

A Simple Retirement Plan in 8 Steps (For Those Who Want to Make Retirement Planning Easier)

We live in an increasingly complex society.

Nowhere is this more true than in retirement planning.

If complications aren’t your thing, here’s a simple overview of the retirement planning process.

For these readers You don’t have the time or desire to become a retirement planning expert.

It provides a solid starting point that eliminates procrastination because you don’t know where to start.

This analysis is particularly simple so that it is easy to take action, and you can explore the included links later when you are ready to dive deeper into the appropriate details.

The important thing is to start taking action now.

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Step 1: Design Your Dream Vision

The first step in retirement planning Figuring out what your retirement vision is.

Will you travel the world with a backpack, travel the open road in your RV, or stay home and read a novel or play cards?

Your retirement vision It is the necessary starting point because it will determine how much your retirement will cost.

You should at least have rough outline of your dream life in retirementor you cannot complete the following steps, which include budgeting and planning.

“I don’t see the need to retire from anything unless there’s a really great alternative.”–Anjelica Huston

Step 2: Choose Your Retirement Date

Once you have the picture of your ideal retirement in mind, it is time to choose the date when you will start living it.

The reason this step is important is because Your pension and Social Security distributions will change Depending on your planned retirement date. Your healthcare expenses It will also depend on whether you qualify for Medicare.

Additionally, the number of years you will spend accumulating your savings and the number of years your current savings can continue to grow will depend on your expected retirement date.

In short you I cannot predict your retirement income. or plan your savings until you choose your retirement date.

Step 3: Estimate What It Will Cost

Now that you have a dream vision and start date for retirement, it’s time to estimate costs and income to see if you’ll have enough money.

The first step in this process is to estimate how much your retirement plans will cost, so make a budget.

Be generous with your estimates because inflation and everything you inevitably forget to include It will cause you to underestimate it anyway. Add up where you can and use your current expenses as a reference to make adjustments.

Relating to:
5 Financial Planning Mistakes That Will Cost You Big Time (and what you should do instead!) Explained in 5 Free Video Lessons

It won’t be completely accurate, but you have to start somewhere. This will probably be as good as it gets until your actual retirement date gets closer.

Some financial planners recommend using 70-80% of current expenses as a guide, but I discuss the problems with this guide and provide detailed step-by-step solutions in this book on Amazon. How Much Is Enough to Retire?

Step 4: Estimate Required Savings

Now is the time to estimate the amount of savings needed to achieve your retirement dream.

You do this by matching your estimated income with your estimated expenses by following these four simple steps:

1. Add together your estimated Social Security and defined benefit payments based on your projected retirement date in Step 2 above.
2. Subtract this from your total estimated expenses in Step 3 above.
3. The difference is your income surplus or deficit. Any shortfall must be made up with savings.
4. Estimate the amount of savings needed to support the income gap by multiplying the annual amount by 25 (traditional 4% spending rule). To retire with financial security, you’ll need to build this level of savings in your retirement plans (401(k), IRA, Roth, etc.) and other accounts.

Based on this step, you now have a savings goal to reach by your retirement date. All that’s left is to create a savings plan to achieve this.

For help in following these steps, contact us. free retirement calculators here and downloadable e-book How Much Is Enough to Retire Here?.

Step 5: Create a Savings Plan

Take the shortfall estimate from Step 4 above and subtract your current savings and retirement plan balances to determine your current savings gap.

Divide this amount by the number of years until your retirement date specified in Step 2 above. the annual amount you need to save to reach your goal.

Conversely, if the savings goal is too daunting, you may choose to take another look at your dream vision and corresponding budget. In other words, the retirement savings gap can be closed by saving more or less. Figuring out how to live happily with less – they are mathematically equivalent.

Some people You find happiness on $24,000 a year and need very little savings others need $240,000 a year. There’s no right or wrong answer, but it’s important to remember that for every $10,000 less you spend per year, you reduce your required savings by about $250,000.

Many people find it easier to reduce spending by $10,000 a year than to increase savings by $250,000.

There is no right/wrong answer. Just decide what works for you.

Try our free quote to help you calculate your savings needs online retirement savings calculators here. For help capturing retirement savings, see our free guide Here are 27 Retirement Savings Strategies for Late Starters.

Step 6: Invest in Savings

This is the most difficult step to reduce to a short paragraph because a wall of books will still leave gaping holes in the required information.

Highly educated professionals are disrupting the investment processand novices are at even greater risk.

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However, the assumption of this article is that you are not into complexity and detail and need to invest somewhere; so let’s oversimplify it and at least give you a starting point.

“People ask me all the time when I’m going to retire. Why would I retire? There are two ways to do it; I’m still making movies and I’m a senior citizen, so I can see myself being half-priced.”–George F. Burns

One reasonable place to look is the variety of target date retirement mutual funds offered. The target date should coincide with your expected retirement date.

If you go this route, use a low-cost provider like: Pioneer, TIAA-CREFor similar, because expenses are important.

This option will provide you with professional asset allocation and portfolio selection for stocks and bonds at a reasonable cost. You don’t need to be an investment expert.

Another possibility is to consider positive cash flow, income producing real estate Since the mortgage is financed free and clear until your expected retirement date..

These are just two possibilities to consider that are reasonable and achievable for someone with minimal investment expertise. And of course always seek qualified professional guidance so your portfolio can be matched to your personal needs.

(To see Steps 5 and 6 of the “Seven Steps to Seven Numbers” curriculum for additional guidance on investment strategy.)

Step 7: Maximize Tax Deferral

Government-sponsored retirement plans (401(k), SEP, IRA, etc.) and rental property. This will help you achieve two main goals:

1. Tax Savings: Qualified retirement plans minimize your savings burden by having Uncle Sam pay some of the cost through lower taxes. You can also have your company pay some of your savings costs when it offers a 401(k) matching contribution plan and you contribute enough to qualify. Additionally, rental properties offer tax deferral through a 1031 exchange. It also provides immediate tax savings through depreciation deductions while minimizing your out-of-pocket savings burden because your tenant may pay some or all of the cost. This is something else A valid investment vehicle for building retirement wealth.
2. Hard to Reach: Another advantage of qualified retirement plans and rental properties is that they make it difficult to access money. You are the weakest link in the savings process. Unless you have the discipline of a celibate monk, the first place you look when you need money is your nest egg. The high cost of refinancing and selling real estate and government-mandated penalties for applying for qualified plans should slap your hands away when you’re tempted to reach for the cookie jar. This will help instill the discipline and determination needed to prevent you from plundering your growing retirement assets, which is a good thing.

Step 8: Start Now

Procrastination is the suicide of wealth in the installment plan.

A simple delay destroys more retirement plans than all other causes combined. The number one retirement killer.

How soon Start saving and planning for retirementThe easier the process will be. If you don’t start now, you’ll only make it harder for yourself. There’s no reason to wait.

Steps 1 and 2 of the Seven Steps to Seven Numbers The important thing is that you start right away and in the right way to be successful and Step 3 It’s about designing your life so that every action you take brings you one step closer to financial freedom.

This is it! Retirement planning made easy, as promised.

Now you have enough information to get started, and when you’re ready, you have all the links you can explore to get additional information.

The important thing is to start now. As you learn more, you can perfect your retirement plan later. There are many free resources on this site.

This article provides everything you need to know to get started. There’s no reason for you to delay. Don’t hinder your retirement.

Good luck and let us know how we can support you.