Retirement Planning: The Critical Steps

Retirement can be an exhilarating time in a person’s life; it is a time to reflect on a long and fruitful career. To ensure a peaceful, happy retirement, one needs to do some legwork. This list of steps should serve to illustrate the proper steps to a prosperous retirement.

Step 1: Know your annual living expenses. In retirement, most people will not be earning any additional income above their pension or retirement account disbursements; it is crucial to know how much you will need to cover their expenses.

Step 2: Plan for emergencies. An emergency fund is essential to prevent against degrading your savings and living expense money.

Step 3: Plan on longevity. The Life expectancy in America is steadily increasing; you don’t want to outlive your money and become a burden on your family.

Step 4: Allocate your investments properly. If you don’t choose the right mix of assets in your retirement accounts, you run the risk of running out of money too early. Your age should equal your capital allocation in short-term bond funds. The rest of your capital should go to the S&P 500 stock market index.

Follow these steps to retire in a stable financial position. Your retirement should be a time to enjoy the fruits of your hard work, not a time to anguish over money.