Planning For Retirement

So, you want to plan for your retirement. Great idea, but what does that involve? Well, it depends on your age and what you’ve done so far for retirement, as well as how much detail you want to get into.

If you’re in your 20’s or 30’s, the main thing you can to is simply to save. The earlier you start, the less you’ll have to put away in the long run. This is because of the amazing effect of compounding. For example, if you invest $1 at age 20, it will be worth $21 when you’re 65, assuming you earn an average of 7%, which is about the historical rate of return on U.S. stocks.

How much should you save? The normal advice is 15% of your income. That can be hard to do when you’re young and not earning a lot, so start with a realistic goal of 3-5% and increase that with time. If your company matches your 401(k) contributions, you should certainly contribute up to the maximum that they will match, since that’s free money.

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Congress Ends Social Security Strategy

By David Savage, CFP®

Last week both houses of Congress passed legislation designed to end a type of Social Security filing strategy known as “File and Suspend”.  Once President Obama signs the Act, which he is expected to do, this will end this technique for maximizing Social Security benefits.  However, certain retirees may be “grandfathered” in, and there are other filing techniques that will still be available.

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