Expert Retirement Planning

Retirement experts agree that they key to retirement planning is to actually make plans. The biggest, and unfortunately most common, retirement planning mistake is putting of making decisions and taking action.

ExpertRetirmentPlanning.com spoke with Tom Tuohy, Illinois attorney and retirement planning expert. Tuohy says, “The number one mistake in planning for retirement is starting late. All planning decisions are best made early. The longer one waits to plan for retirement, the greater the risk unforeseen circumstances will rob you of the opportunity.”

Top 5 Tips for Retirement Planning
According to Tuohy, the following tips are vital for proper retirement planning.

1. Start early.
This can not be overemphasized. The time to start planning is today.

2. Save Consistently.
Starting now allows you the opportunity to invest wisely, to ensure investment funds will be sufficient to allow you to live according to your standard of living and adjusted cost of living and inflation in the future.

The earlier you invest, and the more consistently you save, the greater your return though compound interest. If you have already saved $25,000, and add only $250 per month, at 8% interest, your saving will grow to $100,909.59 in ten years. If you wait and only save for five years, the amount shrinks to $55,749.99. If you started 15 years before your retirement, the amount would be $167,277.08. Start early- invest consistently!

3. Follow the Rules.
There are 3 critical rules to remember:
I) The rule of 72: Take into account inflation and always determine when your current savings will be worth half its current value. If you take an inflation rate of 5%, divide that into 72 - In 14.4 years, your money will be worth half its current value.
ii) 100% Rule: Forget the old advice that you need 70-80% of your pre-retirement income. With uncertainly of social security and rapidly rising medical costs, active and longer lives, you will need 100% of your pre retirement income.
iii) 13 Times Rule: For your lifetime yearly income amounts from an annuity, figure the principal has to be 13 times the yearly amount you expect.

4. Defer Uncle Sam:
Always maximize your contributions to your tax deferred investment plans such as IRA's and 401(k) plans. There is simply no reason not to take the maximum allowable percentage savings on tax deferred plans. Your investment grows at a compound rate - including the tax you have deferred.

5. Complete your Living Trust Estate Plan Today:
We are not promised tomorrow. If you want to ensure your estate is distributed in the way you wish and to also eliminate probate and take full advantage of your available estate tax exemption- complete your plan with out delay. The court system is littered with the estates of those who figured they could worry about their estate plan later.

Tuohy’s final word of advice to those interested in learning how to prepare for retirement: “Did I say to Start Early?”

About the Expert
Tom Tuohy has been in legal practice since 1982, and has taught countless education seminars and provided legal services related to estate planning, personal asset preservation, and financial security. Among his many accomplishments, Tuohy established the Fraternal Order of Police Legal Benefits Plan and is the founder and hands-on president of Dreams For Kids.