By: kjmena

Determining how much you should save for retirement may seem like a daunting question to answer, and the truth is that there is no one answer. Retirement planning varies greatly for each person depending on a variety of factors, including your age and financial situation. To help you get started, we’ve gathered a number of retirement planning tools and ideas to get you ready to ride off into the sunset no matter what stage of life you are in.

Understand the lay of the land

You’ve probably wondered how much you need to save to retire. Whether you’ve been saving for decades or are just beginning to save as a young professional, using an online retirement calculator helps you crunch numbers to see how far your dollars will stretch when you need them. You’ll be asked to enter information such as your current age, planned retirement age, current retirement savings, income, and rate of saving. The calculator will then determine how much money you’ll likely need to retire and how much you will actually have based on your inputs. If you notice a shortage in your projected income, you can play around with your savings amount to help get an idea of how much more you should save for retirement.  

Keep an eye on your investments

Since most people invest their retirement savings in their employer’s 401(k) or some type of IRA, it’s easy to check out and just assume that your money is adequately working for you. However, remember to periodically alter the types of funds you invest in depending on how close to retirement you are. If you’re a young professional, consider placing your retirement savings into a more aggressive account. While it comes with slightly higher risk, you’ll likely earn a higher rate of return while still having time to recoup any bumpy spots. As you get closer to retirement, move your funds into more stable accounts. Always review your 401(k) or IRA statements to ensure your money is growing.

Analyze your real estate situation

Homeownership comes with a number of pros and cons and similarly affects your planning for retirement. The closer you creep towards retirement, take a step back and analyze how your property is working for you. Is your mortgage nearly paid off or do you still owe a large amount? Low housing expenses will help stretch your dollars in retirement. How much equity do you have in the home? Depending on your local market, it may be a good time to consider selling your house. If you stand to make a sizeable profit, selling can liquidate that equity to use in retirement.

It’s always good to think about downsizing for retirement; in addition to lowering your monthly expenses, you can also save yourself time by spending less energy on home and yard maintenance in a smaller home or condo. While it’s entirely realistic that we become increasingly attached to our homes as we age, remember that real estate is ultimately a financial transaction that can be leveraged as a lucrative retirement planning tool.

Retirement and Debt

No matter how old you are, saving for retirement and getting out of debt go hand in hand. The key to a stress-free retirement is to maximize your income while minimizing your expenses. Carrying debt into retirement simply adds unnecessary expenses to your monthly budget. It’s impossible to come up with a one-size-fits-all solution for retirement debt help, so consider working with a professional organization like National Debt Relief to assess your options. While you generally don’t want to neglect your retirement savings because of debt, especially if you’re older, you do want to ensure that you have eradicated your debt before you leave the workforce.

How much do you need in retirement savings? Regardless of what any calculator says, the answer largely depends on you. By creating a diversified retirement savings plan as early as possible, you can create the behavior, the savings, and the income to allow you to live a happy life when you’re ready to retire. Always live within your means with a healthy savings cushion to reduce the risk of debt and leave your retirement money to grow and work, so that you don’t have to.