How Do You Envision Your Retirement?

It's never too late to start planning for retirement. But the earlier you begin, the likelier it is that you'll have the freedom to live those years in the manner you choose.

Here are four important steps to take now to set up your retirement plans.

Pin Down Your Vision -- The conventional picture of retirement has been one of leisure (cue the extended golf game). But to an increasing number of people, that vision now includes employment -- whether it's extending an existing job or business into retirement, or taking a new path with part-time or volunteer work. Know which version is a fit for you.

Estimate Expenses -- Next, calculate how much you'll need to fund that lifestyle. Estimate your retirement expenses. Will you still have a mortgage? Will you relocate? What about health care costs? (Here's a calculator for those.) Don't forget travel and other discretionary spending too.

Identify Income Streams -- Now identify any sources of income you will have. Social Security is usually the first that comes to mind. Though that system isn't designed to be a primary income stream, Social Security provides an average of about 40 percent of a pre-retirement salary. (Get a more accurate estimate based on your actual earnings here.) Pensions, annuities, stock dividends and part-time employment are other income sources to consider.

Build Your Savings -- Your retirement savings are meant to bridge any gaps between your expected income and expenses. Your best bets for socking away funds: IRAs and work-based 401(k) plans.
There's the traditional IRA, which saves you taxes now (if you qualify) while you're still working and likely to be in a higher tax bracket. There's also a Roth IRA, which provides tax-free withdrawals during retirement. (You pay the tax man now, although there are income-eligibility restrictions.) As for a 401(k), your contribution lowers the income you're currently taxed on and often results in a matching contribution from your employer. Take advantage of that free money.

Take these four simple steps now and you may find that your retirement years become your happiest!
Source: Sharon Floyd - Residence Lending (210) 317-8834