Rejuvenate Your Retirement Plan
By Galia Gichon
Have you heard of â€œThe Bag Lady Syndrome?â€ It is very common for women. It means that no matter how financially stable you are, you are afraid you will end up as a bag lady. Rather than feeding into that financial insecurity, challenge yourself to overcome that obstacle and quell your retirement fears.
The first thing you need to do is get the facts. Find out exactly how much you have saved for your retirement. Most of this will be in tax-deferred accounts such as 401(k)s, 403(b)s, IRAs, annuities, life insurance policies, and pensions. You can also look at other savings but you want to keep retirement savings separate from your taxable savings and investments. This is a very important exercise in itself. Many of us donâ€™t keep track of our investments and getting organized and seeing all your assets in one place can be very rewarding.
After you have gotten all your numbers and papers together, you need to confirm that you are on the right savings path for a successful retirement. This takes into account your current income, how much you have already saved, and when you would like to retire. Take this information and plug it into an online calculator. There are many to choose from including: Kiplinger.com and Smart Money.com
What you want to find out is how much you should be saving on an annual basis (or monthly, just divide it by 12). For example, after you input your numbers, you read that you need to save $15,000 a year to reach your retirement goal. At first, this number might seem overwhelming but there are a few points to take into account. You might be already saving a good portion of that through your 401(k). And if your employer is matching, that is extra money you might not have considered. Plus, if you are contributing to an IRA, that is extra money as well. It is essential to not overreact but instead to come up with a plan. If you are saving a great deal less than what you should be, consider these options:
â€¢ Reconsider your retirement date. Run the numbers with a later retirement date.
â€¢ Reconsider the annual income you would like to live on. Run the numbers with this lower number.
â€¢ Increase your annual savings by 5% every year until you reach your goal. This is a manageable number you wonâ€™t feel. You wonâ€™t get there right away but at least you are moving in the right direction.
The important thing to remember is that you found out the facts regarding how much you have saved and how much you need to continue to save. Most people are not facing their numbers and therefore, spending endless hours worrying about their future. You are armed with your information and how to take it forward for a successful retirement!
(Copyright Down-to-Earth Finance LLC 2006)
About the Author:
Galia Gichon, Founder of Down-to-Earth Finance, demystifies personal finance through unbiased financial education. With over 13 years experience in financial services and an MBA in Finance, Ms. Gichon has worked with hundreds of individuals and organizations. She presents seminars and does one-on-one sessions that help people get closer to their financial goals by creating spending and savings plans, mapping out realistic investment strategies, and phasing out debts. She is also the author of the "Personal Finance Toolkit". As an independent educator, she does not manage money or sell investment products. She can be reached at www.downtoearthfinance.com or 212.734.0433.