Retirement Planning: Are You Ready?
It doesn’t have to be difficult or complicated to prepare for retirement. We all know that we’re going to get there one day. But you do need to have an approach in mind so that you can get to retirement and know that you’re comfortable. Taking the smaller steps can make a big difference as you get to that age, but you have to start preparing for your retirement earlier in your career than you think. So if you haven’t started planning for your retirement right now, take a look at the steps below so that you can get it started today.
- Start with estate planning. While we’re not really talking about preparing for your death, they do kind of go hand in hand because your retirement from working life is your preparation for the end of life. Estate planning is going to make a big difference to how easy retirement is going to be for you because you can just step into retirement and enjoy yourself knowing that the end of your life plans are all set up and ready to go. If you know that your will has been written and your funeral has been paid for, you’re not going to worry about any other expenses because it’s already been done.
- Stop panicking about money. Shaking off the financial fear and embracing money related tasks is important. Take a look at your monthly expenses and compare them to what your retirement income is going to be. When you understand your full financial picture, you’ll be able to understand how much more you need to start putting towards your retirement for it to be comfortable for you. Money is always going to be a factor when it comes to no longer working, and you’re the person that’s going to have to make that work. Start saving now and decide on a certain amount to save each month.Even a small amount is something better than nothing.
- Get rid of your debts. You need to review every single thing that you owe right now so that you know that you can continue to make these payments or complete these payments before you retire and no longer have a regular income. You should try to enter retirement, mortgage and debt free if you can so that the money that you do have to live on is just to help you to live. Minimizing your financial obligations is going to decrease the income that you need to be able to have a comfortable retirement, and the earlier you do that, the better.
- Look at what your pension plan looks like. Whether it’s a 401K plan or a private pension plan, you need to look at what’s in there right now and start doing some math to find out what you need. Some companies offer to match a portion of the funds that you contribute to a pension plan every year, so ask if that’s available to you. You then want to ensure that your contribution rate is enough to capture those free funds.
- Auto escalate where you can. If your retirement plan offers an auto escalate option, then make sure that you are doing that. This will boost the amount that you save for retirement overtime and it could increase by a percentage each year for a set period. Maximize the auto escalation feature where possible so that you can ensure that your retirement is comfortable.
- Start picturing the lifestyle that you want. Now that you’ve got to the stage where you are leaving the workforce, what do you want that next stage to look like? Do you want to travel? Do you have plans to start a hobby, or do you plan just to spend some time doing absolutely nothing for a change? The lifestyle that you pick will influence your financial needs, and your financial status will influence the lifestyle that you pick. Planning early is going to help you to align the lifestyle that you want with the lifestyle that you need.
- Calculate and then grow your net worth. First, add up everything that you own from assets to savings accounts, and work out what your net worth is. Once you’ve done that and you’ve subtracted everything that you potentially owe, then start looking at how you can grow this net worth. As much as possible. You need to confirm that you’ve saved enough to retire and have a buffer. For adequate changes in inflation, taxes or the market, you don’t want to run out of money in your retirement years, even if you do have a state pension to lean on.
- Consider working longer. Just because you’ve reached retirement age doesn’t necessarily mean you feel like you need to retire.If you still feel like you have a few more years of work in you, then consider staying employed. Bringing in income for another year or two can make a massive difference, and you could always stay in that employment and save all of that income so that you have even more to add to your retirement later on. You might even just be interested in switching from full time work to part time work where you still have an income coming in, you still have somewhere to be and a structure to your day, and you still feel valuable.
- Speak to a lawyer. Understanding any obligations that you have financially in your retirement is important, so speaking to a lawyer who specializes in finances will help you to get yourself back on track. It’s from here that you can set up your will, understand your financial needs and wants, and start looking at where you can liquidate any assets to keep funding your retirement.
- Talk to other retirees. You are not the first person to retire from their job. It’s important that you connect with those who have done it before you so that you can ask them to share their secrets to staying comfortable and stress free in retirement. You might even learn a few strategies that you can put into place which will help you to make your retirement goals your new reality.
This post originally appeared at MoneyMiniBlog.
Category: Personal Finance
