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Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
Establishing a big picture plan for your retirement allows you to get a better idea of how much money you need to make those plans a reality. The Importance of Visualizing Your Retirement By Britt Erica Tunick As the average life expectancy increases, so too have the years that you will likely spend in retirement. On average, people spend roughly 20 years in retirement, according to the U.S. Department of Labor slightly less for men and slightly more for women. It is important to make sure you have realistic expectations for what your life will be like after you’ve permanently hung up your work wardrobe. 20 years is a long time. Since there are always people on the high end of any average, if your goal is to retire at the age of 65 when planning for your retirement you need to prepare for the possibility that you could live for another 35 years after you stop collecting a regular paycheck. Since financial advisors typically say it requires about 75% of your pre-retirement income to maintain your current standard of living it is important to make sure that you are setting realistic expectations for the future. When considering what your retirement will look like, you should ask yourself what kind of lifestyle you plan for retirement. If you plan things such as extensive travel or purchasing a summer home, you’ll want to get a big picture summary of your current financial position from how much you’ve already saved and invested, to whether or not all of your debt will be paid off before retirement and, if so, how many years you will have to ramp up your savings before you stop working. If things such as extensive travel are part of the plan, as crazy as it may sound, you should start saving for them now regardless of how far off retirement may be. If retirement isn’t that far off, you should consider making catch-up contributions to your IRA or company-sponsored retirement savings plan. Establishing a big picture plan for your retirement not only allows you to get a better idea of how much money you need to make those plans a reality, it also gives you something to continually monitor and measure. If the path of your savings seems to fall short of your plans it may be worth taking the time to speak with a financial advisor to see if there are steps you can take that can help ramp up your savings. |
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