How to prepare and plan for retirement

Whether your retirement is fast approaching or decades away, it is likely that you do not spend much time pondering what will happen when you stop working.
Unfortunately, many people are unable to retire when they would like to because of their financial situation.
The following tips should help you plan your tomorrow days after

Start saving, keep saving, and stick to your goals
If you are already saving, whether for retirement or another goal, keep going! You know that saving is a rewarding habit. If you are not saving, it is time to get started. Start small if you have to and try to increase the amount you save each month. The sooner you start saving, the more time your money has to grow. Make saving for retirement a priority. Devise a plan, stick to it, and set goals. Remember, it is never too early or too late to start saving.

Know your retirement needs
Retirement is expensive. Experts estimate that you will need 70 to 90 per cent of your preretirement income to maintain your standard of living when you stop working. Take charge of your financial future. The key to a secure retirement is to plan ahead.

Contribute to your employer’s retirement savings plan
If your employer offers a retirement savings plan, sign up and contribute all you can. Your taxes will be lower, your company may kick in more, and automatic deductions make it easy. Over time, compound interest and tax deferrals make a big difference in the amount you will accumulate. Find out about your plan. For example, how much would you need to contribute to get the full employer contribution and how long would you need to stay in the plan to get that money.
Learn about your employer’s pension plan
If your employer has a traditional pension plan, check to see if you are covered by the plan and understand how it works. Ask for an individual benefit statement to see what your benefit is worth. Before you change jobs, find out what will happen to your pension benefit. Learn what benefits you may have from a previous employer. Find out if you will be entitled to benefits from your spouse’s plan.

Consider basic investment principles
How you save can be as important as how much you save. Inflation and the type of investments you make play important roles in how much you will have saved at retirement. Know how your savings or pension plan is invested.
Learn about your plan’s investment options and ask questions. Put your savings in different types of investments. By diversifying this way, you are more likely to reduce risk and improve return. Your investment mix may change over time depending on a number of factors such as your age, goals, and financial circumstances. Financial security and knowledge go hand in hand.

Don’t touch your retirement savings
If you withdraw your retirement savings now, you’ll lose principal and interest and you may lose tax benefits or have to pay withdrawal penalties. If you change jobs, leave your savings invested in your current retirement plan, or roll them over to an IRA or your new employer’s plan.

Ask your employer to start a plan
If your employer doesn’t offer a retirement plan, suggest that it start one. There are a number of retirement saving plan options available. Your employer may be able to set up a simplified plan that can help both you and your employer

source: moneycrashers