Six Tips for Creating a Realistic Retirement Plan

Financial security just doesn't come with old age. You need to make a plan early to help you save and start thinking about the future. In order to remain comfortable after retirement, many people start saving early, but they don't realize how much they actually need to survive without any income. According to the United States Department of Labor, less than half of Americans don't calculate the right amount for what they need after retirement. In addition, workers don't often participate in 401K plans, but on average, people remain in retirement for 20 years. Saving for a rainy day is one thing, but when you are planning the rest of your life, you need to consider a few things and begin planning immediately.

• 1. Create Goals and Start Saving

If you have already been saving, you're ahead of the game. You should never stop saving, however. Saving is a great habit to start early on in life, but retirement savings should be separate from vacations and college education. As you start saving, your money begins to grow, and for some, that creates a need to spend, which places a strain on the retirement fund that you worked so hard to achieve. The first step is to write a concrete plan for how to save that includes your goals and expenditures for 20 years. It's never too early to start saving.

• 2. What Retirees Need

When creating this plan, consider what your finances are now. If you have debt, you should find a credit repair expert to help consolidate debt and lessen the financial strain to make it easier to save. Most financial analysts predict that people need at least 60 to 70 percent of preretirement income if they earn above $70,000 a year. For those who have low earning potential, it's at least 90 percent. These numbers are there to help you plan what life will be like when you stop working. You should consider all of your bills and look at both monthly costs of living as well as annual costs. In addition, if you plan to travel during retirement or want to make bigger purchases, your savings plan should include how to set aside funds for those expenditures as well.

• 3. Join Your Employer's Savings Plan

Most employers offer a 401K or retirement plan. You can help yourself by specifying a certain amount that you want saved. Employers usually kick in a $1 or more per what you add to the pot. This allows you to make automatic deposits into your retirement fund. You also earn more money based on interest and taxes, so your retirement plan can really add up in the end. Most retirement plans require that employees remain with the company for a certain period of time before joining a 401k.

• 4. Invest Wisely

If you already have money in the stock market or other types of investments, you may be a little knowledgeable about how to diversify your money so that you are constantly earning. However, you should also consider safer stock market buys and finding ways to increase your investments so you have more financial security.

• 5. Social Security Benefits

Not everyone is eligible for social security benefits. You need to have held a job for many years and earned social security on your income. Most social security pay is equal to about 40 percent of what you earned before retirement. You can figure out the exact sum through the Social Security Administration webpage.

• 6. Talk to Your Family

When you retire, your family's lifestyle will change as well. You should include your spouse in any retirement decision and inform your children as well. If you are starting a retirement plan early, talk to your family about what they can contribute such as an inheritance to ensure that you have all the accurate figures when creating a retirement plan.

Once you've begun a retirement savings plan, commit to your goals and don't touch your savings. It's important to always look towards the future and remember how you want to live those 20 years. If you create a stable plan, you can actually live better in retirement than in any other time of your life.