How to Find and Use Retirement Planning Tools
Financial and Retirement Planning Information - for Beginners
There are thousands of retirement planning calculators and retirement planning software programs on the internet.
My first suggestion is: Never buy what you can get for free. I also live by the rule, you get what you pay for, but this seems to apply more to physical things, such as air guns, dishwashers, and furniture. Why do I say that? Because there are some excellent software programs to be found that are absolutely free. They cost you zilch, nada, nothing.
If you are like me, you are leery to download stuff because you don't know what you will be getting. Well, I found that some sites like Cnet (download.cnet.com) and PC World (pcworld.com) are excellent sites. They review and test a lot of the downloads so you know it is safe. A word of caution, they have freeware, shareware, and trialware, so be careful when choosing something.
Different retirement calculators allow you to calculate for your retirement in different ways. With some you enter how much you want to save per week or month, and for how many years, and the retirement calculator will tell you how much you will end up with. With others, you do it the opposite way. You put in how much you want when you retire, and how many years you have until then, and the calculator will tell you how much you need to save per week or month. By doing a little retirement income planning now, assuming you are starting early enough, and stick with it, you should be set all right when it comes time to quit working.
An excellent place to calculate what you will get from social security is the "Benefits Calculators: About the Social Security Retirement Estimator" on the Social Security Administration website at http://www.socialsecurity.gov/planners/ By entering your earnings the calculator:
- provides an estimate of your retirement benefits comparable to the estimate you receive on your Social Security Statement each year, and
- lets you create additional "what if" retirement scenarios based on current law.
Your retirement savings should be in a separate account or better yet, an Individual Retirement Account (IRA), or a 401k if available. There are also SEP IRA's for the self-employed. No matter what you have, you should plan on making the largest contribution possible.
Some things you should think about when you are planning for retirement. How do you want to live, and where do you want to live? Will you be satisfied living in your present home and reading books all day, or are you thinking more about retirement communities, and a yacht? Do you want enough retirement income to allow you to buy a motor home and travel? You will want to have the financial freedom to live as you would like.
I wrote earlier about debt consolidation, but when you are doing your financial planning, your goal should be to be debt free when you retire. You should get out of debt and then be able to stay out. You want to cancel your credit card debt and your mortgage. Don't, however, cancel your credit cards. That can hurt your credit.
Debt consolidation for beginners can be overwhelming. You might ask yourself, "Will I really be saving money?" or "How much will my new loan cost?" "Where is the best place to consolidate my loans...a bank, credit union or finance company?" You need to shop around and get the best rates. If you can see that you will have to consolidate your loans, do so before you get behind in all of your bills and hurt your credit. Since interest on loans is based on your FICO (credit) score, the better your credit when you apply for a consolidation loan, the better your interest rate will be.
When considering an IRA, shop around and look for the best IRA rates. As with a loan, all banks and credit unions do not offer the same rates. Do you know that you can have several IRA accounts?
Be sure to consider the consequences of getting a traditional or Roth IRA. Put all of the money you can afford into your retirement, but don't forget to set aside some for that rainy day. If you should lose your job, or get sick, or hurt, and unable to work for while, you want to be able to live without having to make an IRA withdrawal. There are substantial penalties for withdrawing your money early. By the way, if you do lose your job, be sure to ask your HR person about a 401k rollover.
Well, that's it for today. Be sure to subscribe so that you will be notified when new posts are added.
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