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Retirement Planning for Seniors
Written By : Nicholas Hare 
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Planning and saving for a comfortable retirement is something that takes time. Some Americans save for decades leading up to their golden years. Most, however, seem ill-prepared until retirement draws nearer. It was estimated in 2011 that an individual would need $1.1 million saved to retire comfortably. But more than half of workers reported they had saved less than $25,000, a mere 2.3 percent of the target. Fortunately, it is never too late to begin planning for the future. But if you're late to the game, you'll probably have to change your goals accordingly. Set your sights on continuing a comfortable lifestyle rather than aiming for a luxurious and vacation-like retirement. You should also think about working a few more years than you intended. This saves money in two ways: you're adding to your retirement fund during those years, and you're not using up the funds already there. You may even want to hold a part-time job during your retirement to help make ends meet. Likewise, consider waiting a few years before you collect Social Security benefits. Once you do start collecting, you'll receive higher monthly benefits. How Much Should I Aim to Save? Most retirees need about 80 percent of their salaries to continue living comfortably. If you currently make $50,000 a year, for example, experts suggest you'll need about $40,000 a year during retirement. To find 80 percent of your salary, multiply your current salary by 0.80. Then determine the number of years you expect to be a retiree. Find out your expected life span, and then subtract the age at which you'd like to retire. Multiply the two numbers together. The result is the minimum amount you should save before entering retirement. Keep in mind that this is only an estimate. You could outlive your expected life span, or you may have unexpected expenses. In either case, you'd need a larger retirement fund. Also remember to factor in any debts you'll be paying off through retirement. If you have outstanding credit card loans or a mortgage, for example, you'll need extra income to continue paying these monthly expenses. It may be a good idea to try to settle your debts before you retire. How Can I Save? If you haven't done so already, look into starting a retirement fund such as an IRA or 401(k). Designated retirement accounts tend to limit your annual contribution. Exact limits are recalculated periodically to account for inflation. Once you're older, you can set aside a larger amount annually. As of 2008, your contribution to a traditional Individual Retirement Arrangement (IRA) was limited to $5,000 a year. Individuals 50 years or older could add $1,000 to their maximum allowable contribution. Limits for 401(k)s are much higher. In 2008, you could put up to $15,500 into your 401(k). Those older than 49 could contribute an additional $5,000. A portion of your 401(k) contribution is typically matched by your employer. This is like a bonus or free money. Be sure to save up at least the maximum amount your employer is willing to match. Money in a retirement account will grow continuously until you withdraw it, so it's best to take advantage of savings opportunities. Set aside as much as your account type and budget will allow, especially if you are behind on saving for retirement.

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