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Taking the Guesswork Out of Retirement Planning

By Daniel @ LivingSenior - February 28, 2012

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The concept of retirement has never been more unstable; than it has been in recent years. For the current working generations, from millenials to baby boomers, retirement is far from the routine process it was for those a generation or two ahead of us. Retirement is now full of unknowns, as government programs change, or threaten to disappear altogether. With people working later in life and delaying retirement, many due to the fact they feel they are in the throes of simply trying to survive financially, It can be a scary road to begin a journey on. However, the sooner you plan ahead, the better shape you will be in when it’s time to enjoy your golden years. This is truly the one hard and fast rule of retirement that has never, and will likely never change.

The absolute latest you should begin to prepare for retirement is 10-15 years before your projected day of leaving the workforce behind. This age may no longer be the typical 55 to 65-year-old age range, since most of today’s Americans are healthier and more active than ever before. Many individuals will enjoy a longer life span, which is obviously a great thing – but may make retirement plans uncertain.

If you’re feeling overwhelmed or misguided, start with a clear and concise timeline. At age 50, catch up on your retirement fund contributions, including your 401(k) and any extra amounts that are commonly awarded to those over age 50.

At around age 59 and a half, enjoy your freedom from tax penalties when you withdraw from retirement accounts. However, remember that leaving money in your accounts gives you further time to accrue interest and other growth.

Age 62 is currently the minimum age requirement for Social Security benefits to be released. Again, remember though that those benefits will grow into a bigger monthly payout the longer it remains untouched.

Finally, at age 70 ½, this is the point in life where you should ideally start to take minimum withdrawls from your retirement accounts. If you go wild earlier than this, then you may meet future tax penalties that are impressively hefty.

One of the main reasons people do not follow this simple timeline, or rather do not even know it exists, is due to the fact they are scared of what they will discover and/or not be able to accomplish. However, when it comes to your future financial security, what you don’t know CAN hurt you – so take the time to sit down with a financial advisor to find out what your options are and how to maximize them.