Planning for retirement is more complicated than most people realize. Many people do not think that retirement is even a possibility. With all of the investing information available, numerous investors are overwhelmed with all of the choices.

Following a basic financial plan is the best way to get started. Although tax laws change almost every year, there are no significant changes to the tax rules beginning in 2019.

Budgeting for Retirement

Having a budget is the foundation of financial success. It does not matter how much money a person makes if it is all spent. A budget should outline the financial details of each month. Many people do not realize how much extra money is spent every month on frivolous purchases. Eating fast food multiple times per month can add up quickly.

Another significant benefit of creating a budget is that a budget shows people where their money is going.

Paying Down Debt 

The vast majority of Americans have too much debt. Since 2008, average consumer debt has risen drastically. During the last recession, many people were more financially conservative. As the economy improves, those consumers are willing to make lavish purchases on credit.

Home equity loans are a common way to get financing. Most people have some equity in their homes since housing values have risen so much in recent years. Although a home equity loan is an excellent way to get a stable interest rate, it can lead to disaster if housing values crash again.

Part of any retirement plan is reducing debt. No one wants to go into retirement with thousands of dollars in credit card debt. Although some retirees still have a mortgage, many financial planners recommend that all debt gets paid down. Lower debt levels benefit retirees in several ways. Not only do lower debt levels reduce stress around monetary issues, but a lack of debt frees up cash each month to spend on other things.


Investing is vital to any retirement plan. People who start investing at an early age have a much higher likelihood of reaching their goals. There are numerous investment vehicles for people to utilize on their investing journey.

  • IRA
  • Roth IRA
  • 401(k)

Each of these options have advantages and disadvantages. As a person gets older, it is important to name an IRA custodian in the event of an early death. The biggest difference in these choices are the tax implications. Working with a tax professional is vital when retirement planning.

Some investment advisors recommend a complicated investing approach to retirement. However, investing in a basic index fund that mimics the stock market is a common approach for many retirees. An index fund has almost no fees, and it is much safer than purchasing individual stocks.

Young people need to prioritize investing as much as possible. There is a drastic difference in retirement options when a person starts investing as soon as they begin working. Many people wait until they have children and are settled in their careers to start investing.

Social Security 

Social security is a government program designed to give older people a monthly income. The program was developed nearly a century ago, but it is still working for millions of people. For anyone who plans to retire in the next decade, social security is still part of a viable retirement plan.

However, young people need to realize that social security will need massive changes to survive financially. The entire program has become much more expensive than anyone ever planned.


Retirement planning can seem complicated and overwhelming. However, following some basic rules allows people to enjoy the best years of their lives. Working with both tax and investment professionals can provide retirees with the confidence they need to make quality financial decisions.


by: Dennis Hung