Retirement goals are very important in your efforts to prepare for and successfully retire. A lot of people don’t have any idea what they want or how to set retirement goals because retirement is a broad subject that covers many different topics. You should first establish what you want to accomplish before you begin your quest toward achieving it. Here are some basic questions to get started:
What are my overall goals? What are the most pressing needs in my lifestyle? How much money would I need to provide for these needs? Would my savings rates allow this? If not, then you should not even begin to consider your goals.
Once you answer these questions, you can move on to evaluating what kind of retirement goals are realistic. Here are some examples: Have you always wanted to own a home? Or buy a big house with a yard? Or travel the world? Maybe you are interested in investing in the stock market or mutual funds. If so, then you should keep your options open and evaluate your lifestyle preferences.
How Would You Like To Be Defined As Retired?
Some people prefer to remain working until they are eighty, but others prefer to leave the work force completely and work only until they are sixty five. In addition, some people may want a higher income than the government offers, while others would rather have a smaller monetary contribution rate. Your personal preferences will determine the best retirement choices for your situation.
How should I adjust my savings rates to achieve these goals? This will depend on how long you plan to live on your retirement. If you are planning on living for ten years, you might want to raise your savings rates. However, if you plan on living for twenty years, it would make more sense to lower your savings rates. Your advisor can help you understand the implications of these decisions, and you can discuss this topic with him or her.
Compare Current Life
How should I compare current life with my retirement goals? Retirees who plan to stay working past the planned amount of time will have a difficult time raising their retirement goals. If you are fifty years old and expect to earn forty thousand dollars by the time you retire, then you have to realize that this will most likely be a lifetime income. The same holds true if you are planning on forty thousand dollars as your salary saved, but you are still going to have a hard time reaching this goal due to the high inflation rates. On the other hand, a retiree who plans on reaching his or her financial goals by the time he or she reaches sixty-five years old will have an easier time raising his or her retirement goals.
There are two other things to consider as well when you are comparing the value of your 401k and your IRA. One is how much free money you would have if both investments had grown to the same extent as you expected them to. The other is what kind of lifestyle you want to live once you are retired. A person who wants to live a lifestyle that is more comfortable may want to focus more on increasing his or her net worth, and less on increasing his or her IRA net worth.