Here are some details about planning your retirement. To have any hope of having a decent retirement you need to start planning early.

How start building up for retirement

Start now if you have not started already, it is never too early to start planning for your retirement. The quicker that you start saving the more time your money has to increase and due to compound interest the bigger the pile will be at the end.
Set your goals up, what sort of retirement would you like to have? Would you want to keep living where you are or move to somewhere which has a slower pace. Do you want to downsize your house once you retire and your children have left the home. As a simple rule you will need about 70% of your current income to keep your standard of living, however you should consider that once you retire you will probably have your mortgage already paid off and not have many the expenses that you currently have, for example related to raising your children.
Set a time line to achieve this, once you have this you can start seeing how much return you will require to achieve this. It is also important to consider how long your retirement will last, with every year that goes by the length of your life is expected to extend. It is also important to note that your retirement date can be pushed out if you still feel fit and capable for work

What sort of retirement do you want?

With today’s extended life spans you can expect to live for 20 to 30 years more after retirement. This makes it very difficult to save enough money for retirement unless you save a significant portion of your income every money, or have very good returns over that time. What you can do to alleviate this is to change your retirement strategy, but either retiring later, this can be a realistic strategy as you can expect to be in much better condition at retirement age than previous generations, due to advances in medicine and if you take care of your health and fitness. You could also potentially semi retire and work one or two days a week, this can be an ideal strategy for many as it keeps you active but also gives you time to enjoy life. Another option is to take a mini retirement, say retire for 2 years and come back to work, then retire, this can have the advantage of recharging the batteries, though it does require that you have a profession where this is a realistic strategy. Whenever you are calculating how much you need to save for retirement you need to take into consideration the rate of inflation as this will erode your money. You could consider relocating to an area with a significantly cheaper standard of living, this will make reaching you’re retirement goals much easier.

Find out what government benefits you will be eligible form

There are many benefits which are provided by the government for older people, you should research all these, with the realisation in your mind that as with all things to do with the government they can be changed or rescinded. If you live in the USA you can find out about Social Security benefits by going to ssa there you can get a free Personal Earnings and Benefit Estimate Statement (PEBES). In the UK there is a state pension, which is generally not close to enough to live on, and also many other fringe benefits including cheaper travel and discounts using various services.

Where to invest your money

Generally you want to put your money in a tax sheltered savings plan, in the USA this would be a plan such as a 401k. In the UK you should take advantage of ISA’s which allow you to make tax free investments either in a cash only saving or to put in stocks and shares. The Individual Retirement Account (IRA), for the USA will probably make up a big chunk of your retirement income. It is possible to put up to $4,000 into an IRA or $4,500 if you are over 55. It is possible to either contribute portions during the year or contribute in a lump sum. Where to put your money once it is in the fund is also a tricky choice. You can invest in government bonds or in the stock market, or even gold. It all depends on how much risk you are willing to take and what return you want, please note though that generally the higher the returns there are the higher the risk is that you will not achieve this return, and that you may lose your original investment. It is also sensible to move your money into safer places the closer you come to retirement that way the swings and roundabouts do not hit you with a low period just when you need to taken the money out.

Diversification is an essential part of any investment strategy. Don’t put all your eggs in one basket, a common but incorrect way to invest is to have most of your retirement savings invested in the company you work for. This has the risk that if the company goes bankrupt then you could potentially lose everything. So it is advisable to have portions of your income spread across different asset classes, as well as potentially different countries and different currencies. This does have the disadvantage that you may not get the returns you would expect otherwise but it does mean you are much less likely to suffer and catastrophic investment decision which leaves you penniless