Whether you are 35 or 55 years old, it's never too early or too late to focus on your retirement savings plans. You can make several retirement-planning moves to save up enough for retirement. However, to ensure that your retirement savings are performing exactly how you want them to, it pays to evaluate them from time to time.
Know What You Will Need
Many people do not have adequate plans for retirement in place. Some people, even if they are saving for retirement, have plans that are severely underfunded. Income today translates into retirement savings for the future, and there are systems in place to take advantage of decades of compound interest. However, it works only if you begin now.
You can use online retirement calculators to figure out how much you will need when you retire. For example, if you base calculations on an investment return of 7.5 percent (a conservative number), plus an inflation rate of around 2.5 percent, leads to around $1 million dollars needed to retire comfortably. Of course, everyone's situation is different, and an experienced financial planner can tailor retirement savings numbers to fit you.
An End-of-Year Checkup
The best time to hold an evaluation of your retirement savings is at the end of the year. Depending on how the stock market is performing and any changes to interest rates over the year, it's a good time to make any changes that will take effect in the new calendar year. Many people like to shift around their assets to take advantage of favorable economic changes, such as putting more into stocks or more into bonds. Or, they want to move into more conservative positions as they get closer to retiring.
Another reason to evaluate your savings for retirement before the end of the year is that December 31 is the last day of the year that you can contribute to your 401k or Roth account. Anything you contribute before that date goes toward the maximum limit. Contributions made today are usually a tax deduction and will help you shore up savings for retirement.
The closer you are to retirement, the more you should contribute to your retirement savings investments. Because time is not on your side when it comes to "growing" your savings, consider increasing the amount of the contribution you make each month or year.
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