Five Ways to Fulfill Your Retirement Dreams - by Jackie Waters

Five Ways to Fulfill Your Retirement Dreams

Guest Post by Jackie Waters

Five Ways to Fulfill Your Retirement Dreams

Depending on your current age, retirement can sound like a lifetime away from now. Many people establish short-term savings goals, but what about the last 20 to 40 years of your life? Have you truly established a plan for yourself once you don’t have to go to the same job everyday? Creating the ideal retirement for yourself isn’t rocket science. In fact, here are five easy ways to turn your retirement dreams into reality:

1.    Set your goal

Do you want to retire at age 50, or do you want to work into your 60s? Where do you envision the rest of your life -- on an exotic island, in the mountains across country, or in your home of 30 years? You can certainly have your “golden years” be fruitful when the time comes, but first you need to decide what that picture looks like. Once you have a specific idea in mind, you can begin to plan on saving to fulfill those dreams.

2.    Determine your savings plan

Many companies offer a 401(k) savings plan to their employees. This can either be matched by their employers at a considerable rate (sometimes up to as much as 15%), or it is simply for the employee to contribute into on a weekly or monthly basis. Of course, this type of savings account is optional, so you won’t automatically accumulate savings -- you’ll have to elect to do so. Speak to your HR representative about this type of benefit for more information.

An especially good option for those who are younger, and if your company offers it, is converting to a Roth 401(k). The beauty of this retirement option is that even though you are paying taxes on the front end, when you are younger and in a lower tax bracket, you will reap the benefits later when you retire, as all earnings are tax-deferred. You cannot take tax deductions on your contributions, but the payoff when you retire is worth it.

If you are self-employed, living and working overseas, or simply just want another retirement source, you may want to think about a traditional or Roth IRA. Although each type of IRA has rules and stipulations, both allow you to make yearly contributions of up to $5,500 per year. With accumulated interest on top of annual additions, you could retire very comfortably if you start saving at a young age.

It’s also wise to keep all of your income and retirement savings tax documents in order from now until retirement, either with an accountant, W2 or 1099 software, or your own personal system of organization. You don’t want to be caught unprepared for an audit, especially once you’ve reached retirement.

  

3.    Set your goal

Do you want to retire at age 50, or do you want to work into your 60s? Where do you envision the rest of your life -- on an exotic island, in the mountains across country, or in your home of 30 years? You can certainly have your “golden years” be fruitful when the time comes, but first you need to decide what that picture looks like. Once you have a specific idea in mind, you can begin to plan on saving to fulfill those dreams.

4.    Determine your savings plan

Many companies offer a 401(k) savings plan to their employees. This can either be matched by their employers at a considerable rate (sometimes up to as much as 15%), or it is simply for the employee to contribute into on a weekly or monthly basis. Of course, this type of savings account is optional, so you won’t automatically accumulate savings -- you’ll have to elect to do so. Speak to your HR representative about this type of benefit for more information.

An especially good option for those who are younger, and if your company offers it, is converting to a Roth 401(k). The beauty of this retirement option is that even though you are paying taxes on the front end, when you are younger and in a lower tax bracket, you will reap the benefits later when you retire, as all earnings are tax-deferred. You cannot take tax deductions on your contributions, but the payoff when you retire is worth it.

If you are self-employed, living and working overseas, or simply just want another retirement source, you may want to think about a traditional or Roth IRA. Although each type of IRA has rules and stipulations, both allow you to make yearly contributions of up to $5,500 per year. With accumulated interest on top of annual additions, you could retire very comfortably if you start saving at a young age.

It’s also wise to keep all of your income and retirement savings tax documents in order from now until retirement, either with an accountant, W2 or 1099 software, or your own personal system of organization. You don’t want to be caught unprepared for an audit, especially once you’ve reached retirement.

5.    Decide how you want to save

Are you a person who wants your savings to be taken out of your weekly paycheck automatically, or would you rather seek out your own method for contributions? Maybe your intentions are to first build an emergency fund or pay off a large debt before you begin investments, which means you only start off by adding your income leftovers to your savings. Perhaps for the IRA, you would feel more comfortable adding one big chunk at a time, every few months. While it’s advised that you should be making contributions as often as possible due to compound interest, unique situations or personal beliefs interfere with the ability to make weekly or monthly additions.

6.    Consider passive income sources

If you have a steady source of income that allows you to retire comfortably, you could still be making money and gaining revenue through passive incomes, even while you’re retiring in paradise and the paycheck is no longer automatic. Different kinds of passive income include real estate investments, writing a popular blog or eBook, renting out a space in your home, and affiliate sales marketing.

Since you assumably have more time on your hands, retirement is a fantastic opportunity to take small risks, like becoming a silent partner on a new business or channeling your love for photography and selling pictures online. With passive income, the opportunities are endless.

7.    Wait for retirement before spending

It’s tempting to withdraw your savings amount before retirement, especially if a financial crisis hits and you need money quickly. However, with several retirement savings options, there are penalties, taxes, and other fees that are accounted for before you’re able to see the fruits of your labor. For instance, with any type of IRA, you have to pay an additional 10% tax for early withdrawals. With other forms of long-term investments, you may encounter significant hardships with removing money from an account that requires you to first be of a certain age.

Photo credit: Pixabay

8.    Decide how you want to save

Are you a person who wants your savings to be taken out of your weekly paycheck automatically, or would you rather seek out your own method for contributions? Maybe your intentions are to first build an emergency fund or pay off a large debt before you begin investments, which means you only start off by adding your income leftovers to your savings. Perhaps for the IRA, you would feel more comfortable adding one big chunk at a time, every few months. While it’s advised that you should be making contributions as often as possible due to compound interest, unique situations or personal beliefs interfere with the ability to make weekly or monthly additions.

9.    Consider passive income sources

If you have a steady source of income that allows you to retire comfortably, you could still be making money and gaining revenue through passive incomes, even while you’re retiring in paradise and the paycheck is no longer automatic. Different kinds of passive income include real estate investments, writing a popular blog or eBook, renting out a space in your home, and affiliate sales marketing.

Since you assumably have more time on your hands, retirement is a fantastic opportunity to take small risks, like becoming a silent partner on a new business or channeling your love for photography and selling pictures online. With passive income, the opportunities are endless.

10. Wait for retirement before spending

It’s tempting to withdraw your savings amount before retirement, especially if a financial crisis hits and you need money quickly. However, with several retirement savings options, there are penalties, taxes, and other fees that are accounted for before you’re able to see the fruits of your labor. For instance, with any type of IRA, you have to pay an additional 10% tax for early withdrawals. With other forms of long-term investments, you may encounter significant hardships with removing money from an account that requires you to first be of a certain age.

Ms. Waters is a mother of four boys, and lives on a farm in Oregon. She is passionate about providing a healthy and happy home for her family, and aims to provide advice for others on how to do the same with her site Hyper-Tidy.com.