10 Secrets for Planning The Retirement Income and Life of Your Dreams

A relaxing retirement is the light at the end of the tunnel for hardworking people everywhere – after years of attending school, working long hours, and raising a family, you finally have time for yourself. Most of us look forward to our retirement years as an opportunity to do and see all the things we couldn’t before – but is this the future that’s going to be your reality?

Too many people who deserve to retire well are stuck working part-time jobs into their 70s, or living minimally on small pensions. A survey was conducted to assess the amount of savings the average American person has for retirement, and the results were dismal. More than half (56%) of Americans have less than $10,000 saved, and one-third (33%) have no savings at all.

To build the retirement of your dreams, you need to do some careful planning for the future – starting right now. There are 10 secrets to successful retirement planning, and they involve setting up a solid financial plan, getting your affairs in order, and sticking with it for the long run.

1: Get Out of Debt

Mortgage payments, credit card debt, bad investments … To build a great retirement savings account, you first need to get rid of money you owe. Having creditors at your heels is no way to retire, and you’ll need extra money to invest. Building your retirement fund is difficult at best when you’re stuck trying to pay off old debts. Commit to getting out of debt using financial planning, debt consolidation, and solid repayment plans.

2: Create an Emergency Fund

A lot of people end up digging into their 401(k) in the event of an emergency because they have no emergency fund. Medical expenses, down payments on a house, funeral costs, and other “hardship withdrawals” can cost you money in extra taxes and penalties, leading to significantly smaller retirement savings. Building a solid emergency fund enables you to have a safety net if your car breaks down, you lose your job, or you need to replace expensive appliances.

3: Work With a Professional

Trusting a professional investment advisor is the Number 1 way to choose the right options for your situation and to ensure your money is being put to its best use. Financial advisors understand the current state of the stock market and can give you expert advice on how to build your savings, invest intelligently, and grow your retirement fund. Leaving your budget in the hands of a professional guarantees no dangerous errors on your part and safe steps moving forward.

4: Start Investing

Putting money into a 401(k), stocks, bonds, and plain old cash can boost your retirement fund considerably. A mutual fund is a great way to invest in all of these or a few of your choosing, safely and easily. Mutual funds ensure that you’re investing in more than one thing, so you aren’t at high risk for losing everything if you make a bad investment. They are also affordable for initial investments and come equipped with a fund manager so you don’t have to do your own research.

5: Update Your Beneficiary Designations

Every time you have a major life change, such as a divorce, marriage, death, or birth in the family, you must update your 401(k) plan’s beneficiaries. If you’re married, your spouse automatically gets the money, so if you want a different situation, you have to go through the proper system to have your spouse waive that legal right.

6: Begin Estate Planning

Estate planning entails going over your will, assigning your assets, and making sure your financial ducks are in a row. Otherwise, you risk leaving your family in a complicated administrative nightmare after your death. It’s never too early to start estate planning, and it’s best to hire a financial advisor for help in situating your assets, investments, insurance policies, and valuables. Your family will benefit in the future from the amount of planning you do now.

7: Decide What You Want to Do

This is the fun part, especially if you’ve been successfully building your retirement nest egg. Planning for what you anticipate doing when you retire will help you prepare physically and financially. If you plan to travel, it’s smart to invest in a travel rewards credit card or other travel program to optimize your money. If you want to volunteer, you can begin any necessary training or paperwork. Dream big, as long as it matches your funds.

8: Avoid Tax Surprises

Many retirees are hit with heavy taxes when they begin withdrawing money from their retirement fund. A lot of people choose tax-deferred accounts while saving for retirement, but don’t realize these accounts generally incur higher taxes than when you were working. Knowing your tax bracket will help prepare you for the amount you’ll have to pay, based on what you’ve saved.

9: Make Your Money Last

You can safely use a certain percentage of money from your retirement fund without risking running out in the future, depending on how much you’ve accumulated. You may have a pension, a part-time job, or money coming in from properties, but eventually you’ll need to rely only on mutual funds or other investments you’ve made. Planning with a financial advisor can help you figure out your annual percentage and help stretch your money farther.

10: Stick to Your Plan

Once you’ve gone through the trouble of building your perfect retirement plan, stick to it. If you’ve had to change your lifestyle based on your retirement goals, it may be hard to adjust. You probably have old, difficult-to-change habits and might struggle with the financial limitations or the savings plan you’ve set up. But to reap the ultimate reward of retiring happily, you must stick to your financial plan for good.

About the author


Founder and publisher of RetireOnPurpose.com. "Let us help you create the retirement plan, income and life of your dreams."