We have posted quite a bit about retirement on Jane’s List-you work hard for every dollar earned and it’s just as important to know how much you’ll need to save in order to retire when you want. Annual financial reviews can help you stay on track and reach your goals, so we’ve listed three essential questions to ask yourself the next time you review your retirement plans, from the column, “Spending Smart.”
What do I have? Make a list of every possible income source you have for retirement, including pensions, 401(k) plans, traditional and roth IRA’s and social security. You can find your social security statement of benefits at www.ssa.gov (you are also mailed a copy every year before your birthday.)
What do I need? A helpful way to determine how much you need for retirement is to track your spending habits now. Your expenses when you retire will most likely decrease, however, you may need more money for travel, medical care and the occasional large purchase, like a car or a boat. Online calculators are a great help. The more detailed the questions, the better your estimate will be. You can find online calculators at www.Fidelity.com, www.troweprice.com, www.dinkytown.net and www.choosetosave.org.
Financial software like Quicken also offers retirement tools to help you determine expenses. Remember, you’re looking for estimates, not exact figures.
Should I consult a professional? One of the best things you can do if you’re unsure how to invest or where to start saving for retirement, is contact a licensed financial planner. A professional planner can offer knowledge, advise you against emotional decisions you might make on your own and help you be more accountable in saving enough for retirement. A planner will also help you decide how to allocate your portfolio and determine how aggressive you want to invest.
If you have a company-sponsored 401(k) plan, contact the manager on the account for free professional advice. There are also fee-only financial planners who charge by the hour instead of commission. You can find one at www.napfa.org.
