Even if retirement is decades away, it’s important to make sure you’re properly prepared when the time comes to transition out of work life. The earlier you start planning, the easier it will be to save what you need to be financially secure in your golden years. With the help of a professional CPA, you can confirm you’re on track to reaching your goals and enjoying a carefree retirement. Here are a few ways to start getting your finances in order.

A Simple Guide to Planning for Retirement

1. Make a Retirement Budget

The first step to making sure you have enough money in retirement is to determine how much you’ll need. Carefully analyze your current expenses and what you anticipate to change by the time you retire. Next, figure out how much income you’ll have coming in from sources such as savings, Social Security, pensions, and annuities. This is a good time to consult a CPA about helping you devise a strategy to maximize your income in retirement.

2. Get Out of Debt

Avoid entering retirement with a substantial amount of debt. If you have high-interest credit card debt, start paying it down as much as possible. This will prevent your bills from eating into your retirement savings. A CPA can provide you with effective advice for avoiding or paying off debt. In the meantime, you can also set money aside specifically for emergencies; if an unexpected expense occurs, you can use this money instead of a credit card. 

3. Contribute to a Retirement Account 

If your workplace offers retirement benefits, such as a 401(k) or IRA, take advantage of the opportunity to contribute to your future. Employers typically match their employees’ contributions up to a certain amount. This is essentially free money going towards your retirement. This will also reduce your taxable income, thus lowering your tax obligations. Talk to a CPA to make sure you’re getting the most out of your retirement account options.

4. Explore Your Insurance Options 

Although you’ll qualify for Medicare upon reaching retirement age, it won’t cover all of your medical needs. Healthcare is often the largest expense for retirees. Thus, it’s wise to consider other options. Purchasing a whole-term life insurance policy will allow you to build cash value just by paying your premiums; you can later use this to help with medical bills. Additionally, long-term care insurance will ensure that you have the funds to pay for in-home care or a nursing facility should the need arise.  

Taking a proactive approach to retirement planning will help ensure you’re set up for an economically stable future. If you’re looking for a reliable CPA to help you with this process, contact Linda M. Shiraiwa, CPA PS Inc. Over the years, she has earned a solid reputation for providing the residents of Gig Harbor, WA, with high-quality financial services. Call (253) 858-6030 to schedule an appointment, or visit her website for more information.