Retirement is exciting because you will finally have the time to do all of the things that you have always wanted to do. The problem is that you have to take the time to plan for all of those activities. Whether you want to sit on the beach or travel around the world, you want to make sure you can do it, and that means putting together a financial plan.

While the best time to start saving for retirement is when you get your first job, you can begin to make up for lost time now. The best place to start is with what you want to do and work to make sure that you have the funds you need when you retire. Naturally, you will need to ensure that your action plan has realistic goals, but that does not mean that they need to be too easy.

Experts have said that a person who makes a plan for retirement is far more likely to take real action. It will also inspire you to put more away because you will know how much money you will need and meeting that goal will be more important.

Starting Your Action Plan

You should start with creating a list. By recording your decisions, you will be able to adjust them and update them as you get closer to retirement. Of course, at this point retirement isn’t too far away, but that is all the more reason to have your plan written down. You don’t need to do everything all in one sitting (in fact, you probably won’t be able to because you will need to do a bit of research and contact HR, which will slow the process). The point is to get started and to wrap it up within a week or so. Then you can update it whenever something changes in your situation.

To help you get started, there are a number of sites with templates available. Take a look at a few of them to get an idea of the kind of information you need. You can even use one of the templates to get started on your planning today.

• National Public Radio has created a template to help you plan out your retirement. Their action plan template is only a page and can help you begin thinking about everything you need to consider to put together a solid plan for your retirement.
• Market Watch can give you another perspective and other actions to take as you develop your plan. They also have a calculator that will help you with some of the later steps in creating a plan.
• Save and Invest can walk you through some of the more in depth steps so that you can consider several angles for saving and setting goals.

Start Gathering Intel and Documents

One of the first places to start your financial details gathering is with your employer. If they offer 401k benefits or other savings, you will want to contact HR so that you will be able to make the most of these benefits. This is particularly important if your employer has a matching option. If your employer matches up to a certain percentage, you want to add as much as possible to maximize their matching funds. For example, if your employer will add 6% of the amount of your paycheck if you also contribute 6% of your paycheck, that means you are doubling the monies added to your retirement. You can add a greater percentage if you want to, but make sure to max out your employer’s matching funds.

Contact other potential methods of saving that you are interested in pursuing, such as investments you want to make.

If you feel you need additional help in developing a retirement plan, you can contact a financial advisor. It is not a free option, but if you find that you are not prepared to tackle something so important on your own, a financial advisor can get you moving on the right track. This could be particularly helpful if you know that you will be short of your financial goals or if you aren’t sure what the best financial sources will be best for your specific conditions.

If you do not have a 401k or other employer savings resource, start collecting details on a Roth IRA. You should consider contributing to that as soon as possible if you are not currently contributing to a savings account. You may want to get another savings account even if you already have a retirement savings account. The more you can save now, the more income you could have after you retire.

Calculate Your Retirement Funds – Don’t Forget Social Security

You need to set several financial goals. Before you can do that though, you need to determine how much income you are going to have based on your current savings and other sources.

Here are the typical funds available. Find out how much you will have available from each of them based on your current situation and savings methods.

• Check out the current progress of your 401k and determine your contribution for a full year. Consider adding this to your current savings amount. Don’t forget to include your employer’s matching contribution. This will help you know the baseline for what capital you will have available when you retire. From here, you will be able to figure out how much you will need to adjust your contributions later in your planning sessions.
• If you have an IRA, take the same steps to determine your annual contribution and current savings amount. If you will not have enough from other resources, a Roth IRA is something everyone should consider for retirement savings.
• If you have investments, make sure to include those in your retirement savings tally, even if you plan to keep your investments after retirement. In the event that you will need it later, it is a resource.
• Include your household furnishings and valuables, including your home.
• Finally, make sure you have an idea of how much you will get monthly from the Social Security Administration. They also have several different calculators that you can use for the remainder of the process.

Figure Out Your Needs

This is going to be the most time-consuming element because it is going to depend on the life style you want to have, as well as planning for emergencies. You will need to pay for Medicare, too, something that many people forget to consider in their retirement planning.

Essentially, you need to make a budget for your retirement. It may be very similar to your current budget, or it may be very different, depending on the life-style you plan to have in retirement.

• You will need to include all of your current costs, such as mortgage (unless you are on track to have it paid off before you retire), power, cable, Internet and other regular bills.
• Any debt you will still need to pay (such as credit cards and loans) will need to be on the budget. Credit cards could be tricky. If you pay them off before you retire, you may still want to use them after you retire. Determine if you will pay them off monthly, as well as how many cards you will have after you retire.
• Insurance costs will still apply after you retire. From Medicare and life insurance to home and car insurance, make sure to include all of the regular insurance costs.
• You will still need to eat, and you are going to be tempted to dine out more often because you will have more time. It may be best to add a little more for this item to make sure you are covered.
• Taxes are going to remain a constant even after retiring. After you have calculated how much money you will have available from your retirement funds that will help you determine your new tax bracket.
• If you are planning to travel, you should add the costs for the trips you plan to take.
• Entertainment is going to be something you will want to spend money on, although it may be a little more difficult to know how much you will spend on it. You can start with your current entertainment budgeted amount, and then decide what other activities you may want to do on a monthly basis.

Finally, the budget ends with inflation. Calculator.net has a retirement calculator with a set inflation rate of 3%. This is probably a little higher than the actual annual inflation rate, but it is best to overestimate inflation than to underestimate it and be short of needed income in a few years.

Determine Your Retirement Date and Goals

Based on your calculations, you can start determining your retirement date (or start figuring out how to save more to meet the date that has already been set). If you want to retire early, this is when you will find out if that is an option. You can play around with different retirement ages to determine if you will have enough money available for a comfortable life after work. Do keep in mind that you can continue to work after you retire – that can be working only part time or you could become a consultant. These decisions will change your income and taxes, so it will require more research. However, if you want to ease into retirement that may be the best option.

Once you have a retirement date and know what your income and expenses will be, you can begin to set financial goals. You will want to break up your goals into reasonable chunks. This can be an annual goal, but it shouldn’t be for more than every five years. You will need to balance your retirement savings with other types of savings (such as emergency, vacations, and major purchases) and your debt obligations. The less debt you have when you retire, the more money you will have for other things, and the less you will pay in interest.

No matter your age, it is best to get started planning today. A retirement action plan is the perfect way help you start thinking about the things that you need to do to help get your retirement savings moving in the right direction.