Planning For Retirement
If you’re thinking about retiring anytime soon, there is no time like the present to start planning. Retiring is a little more involved than simply deciding to hand in your notice. The fact is the earlier you start planning and preparing for your retirement the better.
Since you’re going to be retired for a long time, it’s important to be ready when you do walk out that door for the last time. That’s why it’s a smart idea to plan ahead for that next stage in your life.
There’s a lot to consider when the time comes to start thinking about retiring.
Aside from choosing the right date, there are a number of other things you’ll want to take into consideration. In this article we’ll take a look a detailed look at some of them.
Money Issues and Retirement
Two big deterrents to retirement are debt and lack of money. Trying to retire when you have a lot of debt and not enough money saved up can make it challenging to say the least.
It’s difficult to retire if you are still paying off your mortgage or have a lot of credit card debt or outstanding loans. Your best bet is to try to wipe the slate clean so all of your retirement income is available to you.
Experts suggest that in order to maintain the standard of living that you’re accustomed to, you’ll need to have access to between 70 and 80 percent of what you earned before you retired. It’s easy enough to figure out how much that is. What’s more challenging is figuring out where that amount of money is going to come from on a monthly basis.
Take some time to put some figures down on paper.
If you have a company pension that you’ve paid into over the years how much will that net each month?
How much can you expect from Social Security?
What can you realistically expect to withdraw from investments or other retirement savings you have?
Having those numbers in front of you will give you a better idea of how close you are to meeting your goal.
The money you plan to live on in retirement should cover normal everyday expenses with some left over to spend on the fun things that you’ve looked forward to enjoying. But you may also need money to pay for medical expenses that aren’t covered by Medicare, or for other unexpected expenses that are sure to crop up from time to time.
What this all really means is that if you’d like to be able to retire comfortably and possibly even early, it’s important to start saving as much and as early as possible.
The best-case scenario is to start putting money aside as soon as you begin working and to keep doing it regularly until you actually stop working. (Not everyone is able to do that but if you can, it will make a huge difference in how much money you will have accumulated by the time you do enter your golden years.)
But even if you are only a few years away from retirement, you can still do something about your financial situation. One of the best ways to prepare for retirement is to start a retirement fund because unless you’re already retired, it’s never too late to take advantage of the benefits.
There are government-sponsored funds like a 401 (k), as well as individual retirement accounts (IRA), which allow a tax shelter. But even putting aside a few extra dollars whenever you can, might help more than you think by the time you have to draw funds out of your retirement investment accounts.
Finding More Money Before You Retire
If your goal is to put more money aside for retirement, you may have to find ways to accumulate more money. There are a couple of different things you could try.
Now might be the time to put a concerted effort into earning more money. That might mean working more hours at your current job if possible, or taking on an extra part-time job. Then take that extra cash and sock it away.
You might also consider the possibility of setting up a home-based business. This might be the best plan of all because this could be something you could continue to build on once you do retire. Think of the difference this extra income could make during your retirement.
Another option might be to postpone your retirement. Sixty-five is no longer the magic number when it comes to stepping out of the work force. Some people choose to work longer because they’re not ready to stop. Others are forced to work longer because they can’t afford to retire.
Whatever your situation, working even one additional year means two things. First you’ll be earning and hopefully saving more money for your coming retirement. Second it’s one less year where you will be drawing money from your retirement fund, so it will last longer.
Finding More Money by Cutting Expenses
You may also want to think about cutting back on your expenses and putting those savings into your retirement fund. If you haven’t done it yet, setting up a budget will help you get a handle on your expenses and show you a few places where you might be spending more than you think.
But more importantly, setting up a budget will also give you an idea of how much money you might need once you do stop working. And this is crucial information to have when you’re trying to decide if and when you can afford to retire.
Finding extra money could be as simple as brown bagging it a few days a week instead of eating lunch out every day. Or you could go all out and forego your annual huge vacation for a weekend away closer to home. After all, when you do retire and have time to travel, wouldn’t it be nice to be able to afford to do it?
Another possibility is to downsize your home. Once your family is grown up and hopefully on their own, will you really need all that extra space? If the value of your home has appreciated, this might be the ideal time to sell and find something smaller and more affordable. Then take that extra cash and stick it in your retirement fund.
The Retirement Mindset
To make the transition to retirement a positive one, along with being financially ready, you also need to be mentally ready to retire when the time comes. And make no mistake; it can be a big adjustment.
That’s because aside from money, the other major issue that retirees face is change. Retirement will change many things in your life dramatically and require mental adjustments on your part. Some of those changes will be very welcome, others maybe not so much.
For one thing, although you won’t have the pressure of going to work everyday, you will have a lot more hours to fill. How you fill those hours can be the difference between whether you love or hate retirement. So don’t wait until you’re retired to start developing some hobbies and finding out what you enjoy doing with your free time.
If your life revolves around your job and you never take the time to develop other interests, then you may have trouble adjusting to the retirement lifestyle. On the other hand, if you have a network of friends and leisure activities that you enjoy now, you’ll look forward to the extra time that you’ll have when you retire.
Part of the retirement mindset is to face up to the fact that you are getting older. That can be difficult for some people to accept and if that sounds like you, it might be a good idea to talk over your feelings with someone who is retired and loves it, in order to put a more positive spin on things.
Chances are you’re going to be retired for a long time, so you’ll want to get your retirement started off on the right foot. By taking the time now to plan ahead, when the time does arrive you can look forward to retirement instead of dreading the thought.