personal wealth health

Keys to a Happy Retirement

Start preparing for your golden years with these ageless tips.

WILLIAM J. LYNOTT

In the last couple decades, the concept of “retirement” has undergone drastic changes; for some, the most important being the gradual disappearance of defined benefit retirement programs. Gone are the days when an employee working for a corporation could look forward to a comfortable retirement provided by a company pension supplemented by Social Security.

In addition, the classic benchmark of $1 million may now be a rock-bottom minimum needed to finance a retirement that could extend for 20 or 30 years. And 57% of U.S. workers reported less than $25,000 in total savings, not including their homes, according to the latest survey by Employee Benefit Research Institute.

No matter your age, consider the following:

Save as early as you can.

The sooner you start saving and investing, the more time your money has to grow through compounding. As obvious as this may seem, it shouldn’t overshadow the simple fact that it’s the best way to accumulate the kind of wealth needed to provide for a comfortable retirement.

Kiplinger’s retirement calculator gives you a good idea of what you should be doing at your current age (www.kiplinger.com/tool/retirement/T047-S001-retirement-savings-calculator-how-much-money-do-i/index.php).

Utilize 401(k), IRA and stocks.

Every dollar you invest in a 401(k), or similar account, not only gives you an immediate tax deduction, it also grows tax-deferred until you reach age 70 and a 1/2, at which time you will be required to begin taxable withdrawals.

Similarly, an Individual Retirement Account (IRA) is designed to help you fund your retirement. There are two types of IRAs: The traditional IRA, like a 401(k), provides tax-deferred growth, which means you pay taxes on your gains only when you make withdrawals. If you qualify, contributions to your IRA may be tax-deductible. The second type is a Roth IRA, which does not allow for tax-deductible contributions, but you will owe no taxes when you make withdrawals from a Roth IRA.

Also, stocks have the best chance of providing the kind of returns needed for healthy growth, especially through long periods. Even after retirement, resist the temptation to abandon stocks in favor of bonds. A well-balanced portfolio always includes a solid proportion of stocks.

Set specific goals.

Carefully evaluate your expenses in retirement so that you know how much you need to save to supplement Social Security benefits and any other income to provide the level of living you are planning.

Defer full retirement.

In view of longer life expectancy for most of us, working part-time after “normal” retirement age offers some important advantages: It keeps you socially active, providing important physical and mental health advantages, while also reducing the strain on your existing nest egg.

Start today.

Planning for retirement may not be your favorite pastime, but your efforts today can pay much deserved rewards during your golden years. OM

MR. LYNOTT IS A FREELANCE WRITER WHO SPECIALIZES IN BUSINESS MANAGEMENT AS WELL AS PERSONAL AND BUSINESS FINANCE. VISIT WWW.BLYNOTT.COM, OR SEND COMMENTS TO OPTOMETRICMANAGEMENT@GMAIL.COM.