Hopefully by now you understand that you need more than Social Security benefits and a 401k to be adequately prepared for retirement. The truth is, in order to be comfortable in your golden years, you cannot depend solely on government benefits. Once you establish your plan, your job isn’t over. Knowing when to update your retirement plan is also important.
When do I need to update my retirement plan?
It is not a bad idea to review your retirement plan each year to make sure your wishes have not changed. There are also certain times during your life, when major changes occur. For example, if there is a significant change in your finances, your retirement plan would likely need to be revised. Other events, such as changes in your investment portfolio or the purchase of real estate, may require revisions to your estate plan, as well.
Another important consideration is the need to revise your beneficiaries. If the event of the death of an heir, or the birth of a new heir, you may need to change your beneficiary designations on your IRA, 401k, and insurance policies. Remember that, upon your death, these accounts are transferred automatically to the beneficiaries you have named.
Retirement planning typically does not occur all at once
Initial planning for retirement should begin in your mid-thirties. The initial plan is usually not very detailed. Instead, the goal is to begin considering when you want to retire, so you can estimate how much money you will need. Beginning to plan early allows you to determine whether your goals are realistic.
When you reach your mid-forties, you should have a better understanding of your financial situation. You can decide whether you may want to travel during retirement or where you want to settle down. At this point, your task is to establish more concrete goals. You will also be better able to predict how much money you will have at retirement.
Final planning should take place in your fifties
Once you reach your fifties, you are in a better position to do some serious retirement planning. Examine your investments and transfer them to safer, more stable investment tools. The growth of your investments will be less important than trying to maintain your capital.
Now you can determine when you will be eligible to receive retirement benefits, which is important since the age you start taking disbursements will have an effect on how your retirement plan works.
Can I retire early?
The earliest you can begin collecting Social Security benefits is 62. The longer you wait to start collecting, the larger your payments will be each month. So, hold out as long as you can. Actually, you cannot receive full retirement benefits unless you wait until “full retirement age,” which is now 67 years old, if you were born in 1960 or later. If you were born before 1960, your full retirement age depends on what year you were born.
If you have questions regarding updating your plan, or any other retirement planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.