Exploring Retirement Options
There is no wrong way to retire. A multitude of retirement options is available. Government programs, private savings, and employer-sponsored retirement plans are some of the most well-known options for retirement.
Social Security retirement benefits are provided in the form of monthly payments from the government. These retirement benefits are controlled by government regulations so there is less control over how much money you will have. Financial dependents like children or your spouse can also be supported by Social Security retirement benefits.
Employer retirement plans can take the form of 401k plans, private pension plans, public pension plans, and civil service retirement plans. The type of retirement plan you are offered depends on your employer and how long you have worked for your employer. Certain companies have specific rules about how long employees need to work and longer work often means higher retirement payments.
Others like to save for retirement on their own, without government or employer help. This is often referred to as private retirement savings when someone starts saving early in life for their own retirement. What this can look like is setting aside money for several years with a basic end goal in mind for how much money to save before retiring.
Steps for Planning a Retirement
The first step for planning retirement is envisioning what you would like your retirement to look like. Use this vision to guide you in deciding how much money you will need to be saved up for retirement. Based on this information, you can weigh your options to choose the right retirement plan for you.
Choosing a retirement date may depend on how close you are to this savings goal or on the retirement option you choose. For example, employer retirement plans may involve you meeting with your HR a few months before retiring. Many people recommend confirming the retirement plan is ready within one year of retiring to leave room for correcting errors.
Other important steps for retirement include estimating how much money you will need for retirement and creating a savings plan. Estimate how much money you will need by asking yourself things like:
- Whether you will be debt-free or still be paying bills
- Where you want to live
- The standard of living you want
- Hobbies or traveling expenses
For private retirement savings, start calculating how much you can put away in savings leading up to retirement. This will help create your private retirement savings plan.
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