Q:

How do you prepare for retirement?

A:

Quick Answer

According to the United States Department of Labor, creating and sticking to a plan to save money is the most important step in preparing for retirement. Successful retirement requires planning, commitment and stable finances.

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How do you prepare for retirement?
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Full Answer

According to the United States Department of Labor, retirees need at least 70 percent of their pre-retirement income to maintain their standard of living after they stop working. Putting a set amount of money into a savings account each month is an effective way to start saving for retirement. The Department of Labor strongly advises workers to leave their retirement savings untouched until they retire; withdrawing the money early can cause a loss of interest or tax benefits.

Money can be put into an Individual Retirement Account, or IRA, which can provide an easy way to save for retirement. If an employer has a retirement savings plan, such as a 401(k) plan, an employee may want to sign up and contribute to it as much as possible. Compound interest and tax deferrals can cause money to accumulate over time. Each plan is different, so a potential retiree may ask his employer for details before signing up. An employee may also ask about an employer's pension plan. A retiree also has access to Social Security benefits, which are on average 40 percent of what was he earned before retiring.

Sources:

  1. dol.gov

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