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His team hasbroken down the nine stepsanyone can use tosecure their finances when it comes time to retire.
This requires you to make a retirement goal.
To do this, you must determine what you want to do in retirement.
Dont start with a savings goal that you merely think will be sufficient.
Ramseys team suggested you ask yourself what your dream would be.
It may be relaxing and spending time with grandkids or traveling around the Mediterranean.
With your retirement goal, you might create an accurate strategy to reach it.
Each plan will vary depending on how much youve already saved, your debts and your financial obligations.
Leaving 85% of your paycheck for the rest of your financial needs allows you some flexibility.
A 401(k) is a retirement plan with tax advantages.
The plan invests their monthly contributions into predetermined assets, which can grow free of capital gains tax.
When the employee retires, the IRS taxes the distributions withdrawn from their 401(k).
Contributing to your 401(k) has a big advantage apart from the tax benefit.
Ramsey pointed out that many companies offer an employee match based on your contributions.
Your $200 will grow over time through the investments, adding even more to your retirement savings.
The employee match alone is an excellent reason to sign up for a 401(k).
How much the employee match will vary by company, but its often a percentage of the employees salary.
Because the money deposited is after-tax dollars, the IRS doesnt tax your gains or withdrawals in retirement.
Unlike with a 401(k), you have complete control of your investments.
One of themost common and longest-lasting debtsis a mortgage.
Remember that you dont want to retire with any other debts, either.
Personal loans and credit card debt can cut into your savings fast.
Planning to take on these smaller debts can ensure you begin amassing some savings faster.
Two effective plans are the snowball and avalanche methods.
When you have multiple debts, the snowball method helps you gain momentum to pay them off.
Start with the smallest debt and pay it off completely.
Next, move on to thesecond smallest debtand continue in that order until youve paid off all your debts.
The avalanche method is similar but prioritizes debts based on their interest rates.
Debts with high interest rates, like credit cards, cost you more over time.
Know Your Social Security Choices
The future of Social Security is unknown.
This means you shouldnt depend entirely on Social Security, but you should still understand your choices.
Ramseys team broke down the options you have for Social Security.
it’s possible for you to apply for the benefits at any age between 62 and 70.
If you file forSocial Security benefitsat age 62, youll be eligible for up to $2,710 every month.
If you wait until age 66, youll get up to $3,652 per month.
Waiting to file until you turn 70 gives you the most value per month at up to $4,873.
Determining which route is best for you depends on your personal preference.
Prepare For Healthcare Expenses
One area that many overlook when planning for retirement is their healthcare expenses.
As you get older, your health will get worse.
Ramseys team gave two suggestions on how to plan ahead.
The first is to open ahealth savings account.
In an HSA, you set aside pretax money to use later to pay off qualified medical expenses.
An HSA allows you to use untaxed money to cover deductibles, copayments, coinsurance and other expenses.
Its also possible to grow your HSA by investing.
The second suggestion is to sign up for Medicare when youre 65.
Medicare isfederal health insurancethat can help take the stress off covering your healthcare expenses in retirement.
Ramseys team noted that you’re able to still sign up for the benefits while working.
Ramseys team said feelings likefear, anxiety and impulsivenesscan creep in to wreak havoc on your retirement savings goals.
Or, a sudden drop in the stock market could tempt you to give up on investing altogether.
Coming up with a plan and sticking to it is difficult.
It requires a lot ofpatience and perseveranceto work.
Speaking with a financial adviser can help ensure youre on the road to a happy retirement.
Consulting one can help you shape and reach your financial goal.
It doesnt hurt to get some guidance if youre unsure about how effective your retirement plan is.
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