How to Prepare Financially by agita.nurfiantis


									                            How to Prepare Financially

The first instinct for many people for whom retirement is on the horizon is to relax. After
all, isn't that what retirement is all about? You've worked your entire adult life to relax
throughout your golden years!

But retirement is not without its challenges, whether you're retiring early or late. And
those who don't come up with a retirement plan could find it particularly difficult.
Investing for retirement is essential because the bills don't stop coming once you stop
working. In fact, they often increase: it is estimated that a couple that retires at age 65
will spend $160,000 in health care the remainder of their lives. Most alarmingly, that
figure does not include any costs incurred by long-term care such as a nursing home.

Saving for retirement is a must for those who want to make the post-working years as
enjoyable as possible. Here are some tips to keep in mind as you begin formulating your
retirement plan:

      Try to save 20 percent of your annual income. This is difficult, especially for
       those who are paying for children to attend college. But if you can set aside this
       amount and place it into a bank account and allow it to collect interest, you'll have
       a nice foundation for your retirement plan by the time you actually retire.
      Max out the contributions to your 401(k), IRA and Roth IRA accounts. Those
       younger than 50 can contribute up to $16,500 each year to their 401(k) and $5,000
       to an IRA. Those older than 50 can chip in as much as $22,000 to their 401(k) and
       $6,000 to an IRA. Do the math-that's a great way of saving for retirement!
      Invest in bonds. A good retirement plan is one in which 70 or more percent of an
       investment portfolio is tied up in bonds. Most bonds pay semiannual interest,
       which in turn creates a consistent income stream for retirees. Because of their
       very low default rates, municipal bonds issued by states and cities are the most
       reliable bonds in which to invest. A state bond hasn't defaulted since the Great
       Depression while more than half of the municipal bonds to default from 1920
       through 2010 did so during the Depression.
      Since tax sheltered accounts such as IRAs do not require you to pay taxes on the
       interest in the accounts until you withdraw the funds, a great option is taxable
       municipal bonds. Taxable Municipal bonds give you the safety of a municipal but
       the yield of a taxable entity. For most people when they do eventually take out the
       funds from their tax sheltered accounts, they are retired and in a lower tax bracket
       which makes their interest taxed at a much lower rate.
      The stock market has understandably scared off investors of all ages since it
       collapsed in 2008, but those who have the ability to invest in blue-chip stocks
       should do so as part of saving for retirement. Hanging on to such stocks for an
       extensive period of time provides security as well as, eventually, the opportunity
       to sell at a profit.
   Know that it is never too early nor too late to embark upon a retirement plan.
    Obviously, the younger you start, the better off you'll be in the long run. But those
    who are in their 50s or beyond shouldn't be intimidated by the size of the task
    ahead of them. Money is lost every single day someone puts off retirement
    planning. Ponder these tips and get in touch with your investment advisor today!

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