Planning for Retirement
The best thing that you can do in planning for any type of financial situation, from buying a home to retiring comfortably, is in educating yourself.
Many people are basing their retirements on pre-conceived notions that have never been backed up. There are many things that you should know in preparing to retire.
The first is that you don't necessarily need to maintain the same yearly income in retirement as you did when you were working. The truth is that most people will only need around 85% of their pre-retirement income to live comfortably. This percentage isn't set in stone.
Remember, retirement is an individual thing. You have to look at your needs to determine how much you will need. I recommend always aiming for more than you will ever need. It's better to pass that money on than to run out of it early. Go ahead and save too much.
Don't simply assume that you are on track. Sit down and do the math. Almost 45% of working-age couples are at risk of not being able to retire on time. You have to either save more or work longer. Don't plan on relying on Social Security if you have yet to reach middle-age. It may not be there in twenty more years.
And the young aren't any prepared than the older generation of baby boomers. In fact, younger workers are more vulnerable. They have higher levels of debt and haven't been encouraged to save like the previous generations.
However, many younger workers are more money savy than their parents. They understand the importance of investments and compounding interest. Plus, as they see their parents struggling in retirement, they have time to adjust their savings habits.
Don't rely on the equity in your home to finance your retirement. With the new reverse mortgages, this may be shifting a bit, but you should remember that you can only use a portion of your home's value in a reverse mortgage. At current interest rates, you are able to take out approximately 45% of your home's value. You shouldn't depend on the equity in your home for your living. You don't know where interest rates and property values are going.
You will have to save more than your parents did for retirement. While they can offer pointers, remember that times change. Health care costs are constantly rising. People are living longer, thus needing more retirement savings. With the changing of times, comes a changing of saving strategy. You will need to continue to save, even though you may think you will be fine. As long as you are able to work and save, do it.
It isn't that hard to save for retirement. All you have to do is consistently set aside money each month towards your retirement. Invest it wisely and don't touch it until you are retired. If you contribute 10% of your paycheck, you should see your money grow fairly quickly over time.
Most experts agree that you should expect to work until you are 67 years old, without touching your retirement savings or investments, in order to retire comfortably.
Martin Lukac represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate and mortgage rates. We specialize in daily updates, mortgage news, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!