by Andrew Chan
Pre-retirement and financial planning are two things that go hand in hand. In order to have a comfortable retirement, it is crucial to have good financial planning before your retirement period rolls around. If you neglect to save properly for your retirement years, you will find that you will not be able to have the standard of living that you would like to enjoy. Here are some things to keep in mind in regards to pre-retirement and financial planning.

It is wise to think about pre-retirement and financial planning well before you plan to actually retire. Meet with a financial planner at your financial institution to help you identify your goals. They can help you set up a plan to reach those goals as quickly as possible. Remember, it is never too late or too early to develop a retirement plan.

One of the first things you should do for your preretirement and financial planning is to begin to contribute to your employer’s 401(k) program as soon as you get your first job with this available. Most employers offer this and it is truly a nearly painless way to invest your money, since employers match your contributions to a certain percentage or dollar amount. This means that for every dollar you contribute up to a certain amount, your employer contribute the dollar. You effectively double your savings versus any savings you could do on your own. This is in addition to any interest or dividends your account accrues while you have it.

Another thing you should consider for preretirement and financial planning is an IRA. The maximum amount one person can contribute is $4000 a year, plus an equal amount for a spouse as applicable. If you’re over 50, you can contribute $5,000 a year each for you and your and an over-50 spouse. When you contribute to an IRA, that money is not taxed until you begin to withdraw it. However, you are penalized if you withdraw from discount before the age of 55 1/2.

Another necessary element to saving for retirement is to have a realistic budget and to make sure you stick to it. Of course, you don’t want to go without, but especially if your salary is adequate, you can easily save between 10 and 15% of your income for retirement and still have enough left over to live on very comfortably. This is a relatively small percentage of your income to save; make sure as well that you live within your means, as this is equally important.

Next, get rid of any debt other than your mortgage or a student loan. Carrying balances on credit cards is a sure way to negate any savings or retirement goals you have. Set up a plan to pay them off as quickly as possible. Don’t carry balances month-to-month. Instead, pay your credit cards off every month and treat your credit card just as you would your checking account. In other words, whenever you make a purchase with your credit card, enter that exact amount into your checking account register with the designation “credit card purchase” or something similar, as though you had spent cash on your purchase. Then when your credit card bill comes due, you should already have the money for the bill put aside under this designation in your checking account, so you simply have to pay the bill with that money.

Finally, check your insurance and make sure your plans don’t overlap. It’s a waste of money to have duplicate coverage. If you need help, talk to your insurance agent and/or financial planner and make sure that you only have the exact insurance policies you need, with no overlap and in the correct amounts.

When you are thinking about pre-retirement and financial planning, remember to begin your plan as soon as you can. Even if you are nearing retirement age, you should consider all of the options available to you to maximize your assets. Pre-retirement and financial planning can be a daunting subject, but if you tackle it head on you will be glad that you did.

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