Preparing for retirement involves setting goals, being proactive, and saving as much money as you can. Though it’s best to start as young as possible, once you pass 50 and retirement is imminent, your savings and goal strategies become even more important. Here are 11 must-know pieces of advice that will help you retire comfortably.
Always Pay Yourself First:
A large number of Americans don’t properly save for retirement and don’t set aside enough money to reach their goals. A simple way to avoid a money crunch in the last few years of your career is to pay yourself first, before you pay other bills. If you have a hard time being disciplined enough to do this, set up automatic transfers that put money into a retirement account for you.
Save Your Pennies – Literally:
Saving a dollar or ten dollars may not seem significant, but compounding interest causes it to add up quickly. If you have extra money left after paying your bills, put it into a retirement account. Every extra dollar helps you reach your goals at a faster pace and will give you greater peace of mind when you retire.
Expect to Live a Long Life:
Retiring in your 60’s may require enough funds to last for 30 years or more. As Americans live longer, they must also save for a longer retirement period. Expect to live a long life so you do not run out of money in your later years.
Consider Rising Health Costs:
Health care costs and the cost of health insurance consistently increase as you age, so be sure to account for rising health care costs in your retirement savings plan. While you may still be eligible for some benefits at retirement age, you likely won’t have as good ofcoverage as you do with an employer-sponsored plan. Plan accordingly!
Assume Social Security Is Not Enough:
Don’t expect that the social security benefits you collect to cover all your expenses. Instead, as you plan for retirement, use a calculator that accounts for inflation to help determine how much money you can expect to receive and how much money you need to save on your own. Unfortunately, that means putting a greater amount of financial responsibility on yourself, but neglecting to do so can cause all kinds of problems.
Pay Debts Early:
High-interest debts, like credit card balances and car payments – impact your ability to save money. Avoid stress and pay off your debts as early as possible. Then, try to maintain a lifestyle that is within your means to avoid future money stress. The last thing you want is to be using retirement funds to pay off debt balances.
Downsizing helps with your retirement goals in two ways: It cuts back on your cost of living, and it gives you extra funds to help you meet your retirement goals. For example, if you sell a large house and purchase a smaller property, you can buy your new property outright and put any excess funds directly into your retirement account. If you live in an area with high cost of living, consider moving to a less expensive area.
Always Have an Emergency Fund:
Life is unpredictable, and that doesn’t change when you retire. It’s always best to have an emergency fund at the ready in case of issues with your car, a broken air conditioner, unexpected medical issues or an accident. Make sure you continue to keep an emergency fund on hand for these incidences, so you don’t find yourself dipping into retirement savings when the unexpected happens.
Planning for retirement is a key part of avoiding complications with your finances as you age. Money issues are stressful, but with some thoughtful planning and a little self-discipline, you can set yourself up for a happy, fun and healthy retirement.