10 Ways to Prepare for Retirement

Are you prepared?

Retirement is different things to different people. For those in their 20s, it's a distant dream. For those in their 30s and 40s, it's a minor concern. For those 50 and beyond, it's a reality that must be dealt with. No matter what your age, you should start to prepare for your retirement and the sooner the better. Here are 10 ways you can start preparing right now.

1. Review your finances

If you know where you are, you can prepare for where you are going. If you are deep in debt, chances are you are not prepared for your eventual retirement. If necessary, set up a budget and be sure to include something for your retirement. No matter what your age, you should be putting something back for your retirement. It’s estimated you will need between 70% and 90% of your current income to maintain the same standard of living after retirement.

2. Review your retirement needs or goals

What is your idea of retirement? For some, it’s sitting on the porch and watching the grandkids play. For others it’s traveling. For still others, it’s somewhere in between. What are your retirement needs or goals? Knowing what you plan to do can give you some idea of what you will need in the way of money and health.

3. Develop a healthy lifestyle

When you retire, you no doubt want to be healthy so you can enjoy every minute. Now might be the time to lose the extra fat, start an exercise program, or quit smoking. Frugal saving and living habits to prepare for retirement won’t mean a thing if you don’t feel like getting out of bed once you retire.

4. Talk to your HR representative about your employer’s retirement plan

If your employer provides a pension or other retirement plan, ask for a summary plan description and ask for an explanation of the plan. Find out what you can contribute and if your employer provides matching funds. Also ask about vesting.

5. Talk to your spouse about his/her retirement plan

If you are married, you should discuss your spouse’s retirement plan to find out what benefits you might be entitled to receive. You should thoroughly understand any consent forms or waivers that you might be asked to sign for your spouse’s retirement plan distributions.

6. Review your benefit statement

Your employer should provide an Individual Benefit Statement periodically. This benefit statement shows your total plan benefits along with the amount that is owned by you. You should thoroughly review this statement and if there are areas that you don’t understand or disagree with, you should talk to your benefits administrator immediately.

7. Open an IRA

Almost all Americans can open an IRA if they or their spouse has earned income. An IRA can be either a traditional IRA or a Roth. You bank or other financial institution can tell you whether you are eligible to open an IRA and help you with the process.

8. Review your Social Security Statement

Each year, you should receive a Social Security Statement about three months before your birthday. This is a record of your earnings that have had Social Security taxes paid. It also has an estimate of the benefits you or your family might receive from those earnings. If you find a mistake or disagree with this statement, you should contact the Social Security Administration immediately.

9. Discuss your retirement goals with your spouse and family

This is especially important if you are near retirement age. Your spouse might have different retirement goals and you will need to come to some sort of compromise. Your family should be aware of long range plans that might affect them. This would include moving to another area of the country or selling the home place to buy a motor home. It’s best not to surprise those you love in these situations.

10. Think about how you will spend your time

Nothing is more frustrating than to have time on your hands and nothing to do. Once you retire, you might want to take another job, volunteer, travel, enjoy a hobby, and so on. Take some time to think about what you might want to do before you wake up that first morning and don’t have to go to work.

While these 10 suggestions on how to prepare for retirement won’t guarantee that you will be ready for the big “R”, they will give you some ideas on how you can prepare. By planning for your retirement, you could make this phase of your life one of the best.