Planning for retirement is a multi-step process that can seem intimidating at first. The solution is to take it step by step, one task at at time. Here's a basic outline of what you need to do to retire.

Step 1: Envision The Lifestyle You Want

Th🍒e first step in planning for retirement is imagining what you want your retirement to look like. So think about the lifestyle you want to enjoy. This will affect how much you need to save: travel and certain hobbies, such as golf, will cost more than days spent gardening.

Also consider the age you hope to retire. The later you retire, the more years you have to save— but the less you might be able to enjoy it, if your health takes a turn. Conversely, the earlier you retire, the less time you'll have to save money, and the longer you'll have to support yourself with your savings. You'll also receive less money from the Social Security Administration.

Step 2: Calculate How Much You Need to ♕Save—and Whether What ꦆYou Have Will Be Enough

After you've figured out your lifestyle expectations and desired retirement age, the next step is to calculate the amount you need to save to make your retirement happen.

First, add up your income. You can start with Social Security. The average Social Security monthly benefit for a retired worker was $1,925.46 as of November 2024. Your own benefit will be higher or lower, depending on your salary for your 35 highest-earning years, plus the age you decide to take benefits. The earliest you can collect benefits is 62, but if you do so, your benefit will be lower than if you wait until your 澳洲幸运5官方开奖结果体彩网:full retirement age (age 66 or 67, depending on your birth year). The longer you wait to collect, the higher your benefit will be— up to age 70. (There's no incentive for delaying past age 70.) To estimate your benefits, go to ssa.gov.

Then, add in all other retirement assets. This may include retirement investment accounts, such as 401(k)s and 澳洲幸运5官方开奖结果体彩💎网:individual retirement accounts (IRAs). Also, add in your 澳洲幸运5官方开奖结果体彩网:home equity.

Next, add up your expenses. If you don't have a 澳洲幸运5官方开奖结果体彩网:monthly budget, this might be a good time to start. Review your credit card and bank account statements to track your spending. Segment💞 your spending into categories, then add everything up to reach a m▨onthly total of what you spend per month. Then review what you decided in step one when you settled on your retirement lifestyle. Are you planning on a retirement with lots of travel and expensive hobbies? Or are you planning on a more modest retirement? If it's the latter, multiply your monthly expenses by 80%. If it's the former, do nothing.

Then, compare what you have saved (your eventual retirement income) to what you plan to spend. To do this, you'll need to turn your savings into a monthly number that will sustain you for your entire retirement. One way to do this is by using the 4% rule, which states how much you can safely withdraw from a retirement account. If you withdraw 4% the first year and then the same amount every year after that (adjusted for 澳洲幸运5官方开奖结果体彩网:inflation), it's very unlikely thatꦛ you will run out of money within 30 years—which is enough for 🧔a typical retirement. So say you have $1 million in an investment account. You could withdraw $40,000 per year ($3333.33 per month) for 30 years. While about $3300 per month may not be enough to live on alone, you'll also have your Social Security benefit. Adding in the average benefit (see above) results in $5,258.79. That's $63,105.48 per year.

Finally, compare your estimated monthly income (in this case, about $5260 a month) with your estimated expenses (this will vary, depending on your desired lifestyle).

Step 3: Plan How to Leave Your Job

When the time comes to actually retire, consult your employee handbook to find out what the requirements are in terms of giving your notice. Generally, you can expect to be asked to give two weeks to one month's notice in order to prepare your 401(k), profit sharing or other employer-sponsored plans. Your employer may also have a special seminar or meeting you need to attend in order to understand how your specific benefits work.

Step 4: Make a Plan for Your Healthcare

Finally, consider your healthcare needs. If you are age 64 and nine months or older, you should sign up for Medicare benefits. If you have a 澳洲幸运5官方开奖结果体彩网:health savings account (HSA), call your custodian to find out how you can start taking distributions, once you are 65 and covered by Medicare.

Step 5: Start Taking Social Security

When the time comes, apply for benefits on the 澳洲幸运5官方开奖结果体彩网:Social Security website. This may be years after you leave your job: you may rely ꦍon personal savings for a few years while delaying collecting Social Security so you can receive the highest benefit possible (up to age 70, as stated in step two.)

Step 6: Adjust and Chaไnge Plans When Life H🗹appens

Remember, retirement is a journey. Your experience will vary based on your goals and obligations. You may pick up a 🌱second job for a few years🐻 and then make no extra income for a decade or more. You may travel for the first several years and then spend more time at home. Be flexible, keep planning, and enjoy.

The Bottom Line

Planning for retirement can be overwhelming, which is why it's crucial to break it down into more manageable steps. The first step is to envision your lifestyle. The next step is to understand how much you'll need to save, which you can find by adding up your expenses, and considering your lifestyle. To determine if you'll have enough, you can use the 4% rule. Once you have a clearer picture of what retirement will look like, and whether you'll have enough, you can start setting things in motion for when you retire: choosing a retirement date, getting your healthcare sorted out, and more. It may be a good idea to reach out to a certified financial planner if you have questions.