Many of us are planing for that day when we can retire. Or at least work part-time doing something we actually enjoy. However, few of us will truly be ready for retirement when the time comes. This is because we so often neglect the basics of retirement planning. Indeed, there are plenty of neglected basics of good financial management and planning that can trip you up when it comes time to retire.
If you want to retire “on time,” you will need to make plans now to prepare. Put together a financial plan that takes into account your goals for retirement, and work toward making those goals a reality. As you prepare for a successful retirement in the future, here are some things to keep in mind:
Consistency is Key
One of the most important things you can do as you prepare your finances for a brighter future is consistency. You need to be consistent in your savings plan, setting aside money each month. There are a number of retirement calculators  out there that can help you figure out how much money you need to put into your retirement account each month if you want to reach your goal. You also need to be consistent about your spending, budgeting and other aspects of your financial life.
Debt is Bad
Nothing drains your retirement income potential like debt. All that money you are paying in interest to someone else is doing nothing to benefit you. It just leaks out of your budget and into someone else’s pocket. One of your goals, before you hit retirement, is to reduce your obligations as much as you can. Many people include their mortgage debt in this. You will feel more secure about your retirement, and have more money at your disposal, if you can pay down your debt  — especially costly consumer debt — as quickly as possibly.
Fees are Bad, Too
It’s not just the interest you pay on debt that can reduce your real returns and slow your efforts to achieve your retirement goals; fees are a drain on your retirement as well. If you pay high fees on the funds in your retirement account over the course of 20 or 30 years, you will miss out on a substantial amount that could have been funding your retirement. If you want to maximize your retirement, you should look for low fee investments. Additionally, minimize transaction fees by avoiding constant trading. You should re-allocate your assets on occasion, but you don’t need to be constantly trading. That’s a good way to reduce your real returns.
Max Out Your Tax-Advantaged Accounts
If most of your investing is done for retirement purposes, it is a good idea to max out your tax-advantaged retirement accounts before you open other investment accounts. Make sure you are taking advantage of IRAs and 401Ks (you can have both kinds of accounts) before you use investment accounts that do not have the same advantages. And remember that your spouse’s contributions to accounts in his or her name are considered separate. So if you both have IRAs, you can contribute up to $5,000 to each IRA , for a total of $10,000. And while you’re at it, don’t leave free money on the table. If it’s an option, max out matching contributions from your employer.
So… will you be ready?
(Photo: erbutcher )