Got a minute? Then I've got a retirement plan for you.
1:00: Picture your perfect retirement
Start with the easy stuff -- pick a temperate locale that will serve as the setting for your post-employment, Jacuzzi-soakin', catnap-takin' golden years. Answer this basic question: When do you want to retire? How many years away is that? (OK, that's two questions, but at least the math is easy.)
0:55: Price it out
Sure, it's easy to see yourself living the retirement high life. Figuring out what it will cost to actually do that is another thing. If you start pricing it out now, you won't experience sticker shock when your old ticker isn't as strong. Don't think of this as a lugubrious budget -- consider it a "pre-spending spree."
0:48: Shirk the savings responsibility
Now that you're done with your fake shopping, it's time to plunk down some Monopoly money. How much of your own dough will you need to fund your future? Here's a brief but telling exercise that calculates how your retirement tab will be divided among Social Security, your pension, and other sources of retirement income.
0:40: Face reality, but "pretty it up" a little
After you pick yourself up off the floor and take a hit from your daughter's inhaler, revisit that figure you just calculated. Remember, you have a few years to come up with the dough, so do some fancy math and break down the gargantuan number to a more reasonable monthly sum. Think you can invest that much on a monthly basis? (That's rhetorical, by the way.)
0:26: Hide your assets from yourself
How do I manage to sock away 15% of my monthly pay? By hiding it from my greedy self. It's easy to siphon money from your current, less-mature self to your future, more-refined self: Have your contributions taken directly from your paycheck, and/or have money automatically transferred from your bank account to your retirement accounts. Once you fill out the right paperwork, you'll find that it's easy to make saving for the future downright mechanical. Your future, still-handsome self will thank you.
0:19: Keep as much as possible away from Uncle Sam
Take advantage of accounts that offer tax savings, such as IRAs, 401(k)s, SEPs, and XYZPDQs (OK, we're kidding on that last one). More for you, less for Uncle Sam. Contribute the maximum allowable amounts that you can. If your employer matches the contribution you make to your plan, make sure you grab that free money. Opening an IRA can be done, well, PDQ -- we've timed it.
0:11: Put the plan into action
Now that you know what you have to do, go out and do it. Open that IRA, boost the contributions to your 401(k), cut back on your spending, increase your portfolio returns -- whatever you think you need to do to retire in the style to which you aspire. Yes, do it now.
0:05: Retiring soon? Showoff!
If you're 10 or fewer years from retirement (you lucky devils), you have a few extra considerations. In particular, start thinking about things like safer investments, withdrawal rates from your retirement accounts, and taxes. Let the Fools at Rule Your Retirement check your math. And save a piece of retirement cake for your favorite Fool writer.
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