Are you prepared for your retirement? Around 58 million Americans have no retirement savings, with a considerable portion of this being younger workers. However, those coming up to retirement age are also finding themselves with no way to generate an income once they do decide to retire.
Retirement planning is something you can start at any age. The earlier you start, the less you will need to put away. While figures suggest $150,000 is a good amount to live off when you retire, The Federal Reserve indicates that most people have closer to $255,000 come retirement based upon current saving patterns.
But is planning for retirement only about finances? Not really, although they do play a massive part in preparing for this stage of your life. But you can prepare for retirement in many ways besides having enough money to support your lifestyle. So brushing aside the savings and $401K plans ( if you don't have these, look into them asap!), this post looks at the other ways you can prepare for retirement.
How Much Will You Need To Live Off?
Retirement can be a complex change or many people's lifestyles, and often, it can be something they think they are ready for, but in reality, they have not planned properly. Regardless of how much money you have saved up at this point, you need to know exactly what you need to live off.
Your current bills and outgoings can be a good place to start. Factoring in your current bulls, utilities, healthcare plans, and so on can budget effectively. Of course, expenses can and will change, and the current cost of living crisis can artificially inflate how much you will need depending on how close retirement is for you. But taking into account every single expense you will have, including food, travel, socializing, entertainment, and more, can help you to come up with the retirement figure you need to live comfortably on realistically.
Pay Off Your Mortgage
Even if you don't manage to have substantial savings, paying off your mortgage as soon as you can will take a massive financial burden off you. This leaves you free to explore your living arrangement post-retirement, knowing your home is owned outright, and you won't fall behind with payments. Organize your finances to see if you can make additional payments or increase your monthly payments to help you achieve this goal.
While we're not discussing savings plans or the 401K, trying to make some suitable investments can set you up for a windfall and more comfortable future. Consider keeping a mix of different stocks, bonds, mutual funds, and more to help not only diversify your portfolio but ensure you are investing within your risk tolerance and giving you a secure future.
Start by paying off all of your higher-interest accounts. Those high-interest credit cards, pay them down and reduce your reliance on them. The fewer bills you have to pay, the longer your funds will last. It's that simple. Work through all of your debts to ensure you are planning for a debt-free future as much as possible to reduce your outgoings when the time comes.
Assess Your Retirement Needs
Do you know what you can expect to need support as you age? From health conditions to moving to assisted living, care options, or even funds to help you travel. Sit down and really think about what you want your retirement to look like, what it will take to sustain that lifestyle, and what you can expect to happen. While you can never know what the future holds, being analytical about what you can expect based on your current situation can help you to explore your options more fully. This brings on the next point nicely.
Don't Forget About Medical Costs
Medical costs are one of the top three reasons people go bankrupt in the US. When you reach 65, you will likely qualify for Medicare, covering most of your routine medical bills. However, it is always a good idea to have supplemental coverage to help you with any additional costs or medical care that isn't covered.
Another consideration is that Medicare doesn't cover you for long-term health care, so should your health reach the point where this is an option, you need to look at alternative ways to find this.
Insurances, Plans, and Prepayment Schemes
When you reach a certain age in life, you will be bombarded with many types of health, insurance, and payment plans for various parts of your life.
At a minimum, you need good medical coverage, life insurance, and even home and buildings insurance for your property. These can take the hit of any massive costs you might incur that can eat into your retirement funds.
Other options you can look into include choosing funeral prepayment plans, including buying Memorial Rocks and Stones by Memorials.com for when the time comes so everything is taken care of, and setting up a prepaid healthcare plan to help you pay for any long-term future costs.
While we touched upon paying off your mortgage earlier in the post, looking into your living arrangement when you retire will help you get an idea of what you will need when the time arrives.
Will you be wanting to remain in your home? Do you want to travel the world and are looking at selling up? Do you want to join a retirement community or move closer to your family? All of these options will require some level of forethought and planning. The earlier you decide, the more time you will have to plan for them so you can hit the ground running once you retire.
While experts suggest that starting to save from your 30s or 40s for retirement is the optimal age, nothing is stopping you from doing so earlier or later. However, saving up in a retirement fund isn't the only way you can prepare for retirement. The tips in the post can go a long way in supporting your retirement and help you to ensure you have everything you need in place ahead of time, so all you have to do is relax and enjoy.