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Financial Planning
Most of us wonder if we are saving enough to support
ourselves through 10, 20, or even 30 or more years
of retirement. Whether you are approaching your prime
earning years or nearing retirement, proper planning
can help you make the most of your retirement assets.
By using some simple calculations, you can get a
good idea of how much income you will need to live
comfortably in retirement and what steps are necessary
to reach your goals.
Retirement Planning
Whatever your goals, your top investment priority
should almost certainly be retirement. You can borrow
to help finance a house or a child’s education,
but no one is going to lend you money to finance
your retirement.
How much should you save for retirement?
Many people assume the answer to that question is
zero because
their retirement money will come from an employer-sponsored
pension plan and Social Security, if eligible. Unfortunately,
both these options combined may not provide a sufficient
retirement income.
Retirement Costs
Retirement today does not mean just sitting in a
rocking chair. It can mean having the freedom to
live your life the way you want to, enjoying:
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Leisure activities |
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Time with family |
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Living where you want to |
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Helping others |
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Travel |
But having an active retirement
takes planning. An active retirement that includes
leisure activities,
such as travel, costs more than one that does not.
So you will need to save more for this.
One of
the most important steps you can take as a retirement
saver is to figure out how much money
you will need. Many people do not know—or
significantly underestimate—the amount of
money they will need to live comfortably in retirement.
Make an estimated
retirement budget by writing down all your expenses
and adding them up for each year of expected retirement.
Income Sources During Retirement
How much of your retirement income will come from
your Police and Fire Pension benefit, your Spouse’s
benefits, Social Security, and from other sources,
such as a retirement nest egg? Estimate how much
retirement income will come from the following
sources:
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Your pension |
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Employer-sponsored retirement savings plans |
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Social Security benefits from other employment |
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Savings and investments |
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Other sources of income, such as salary from
work that you continue after retirement |
Set Your Savings
Goals
Basically, you must look at how much you expect
to spend in retirement and compare that to
your income
sources. Then you will find out if you have
enough money to last through retirement or not. To make
a nest egg calculation:
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Estimate how long you will live—possibly
until age 90 or longer. |
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Estimate your annual expenses in retirement. |
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Estimate your total retirement savings (nest
egg)—Assume that you will continue to save
at the same rate you are currently saving until
retirement. |
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Estimate your savings surplus or shortfall. |
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Estimate your annual savings needed—if
you need more money to fund your retirement,
calculate how much you need to save per year. |
Start Saving
More Today
You are responsible for making your future
happen. Start saving now, whether you are age
24, 34,
or 44, even 54! One of the easiest ways to
save money
is to take advantage of account builder programs
that automatically withdraw funds from your
paycheck or bank account and invest them automatically.
Do not wait until you can “afford it” to
save for retirement. Start now, even if you can only
set aside small amounts. Your savings will add up
faster than you think—and you will have a
tremendous feeling of accomplishment!
Educate Yourself
Sign up for the Pension System' training programs, PREP (Pre-Retirement Education Program), Financial Plannning seminar, and Pensioner's Financial Planning seminar. For more information, see the Education section of this Web site. To make reservations, contact the Pension System office.
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