Why Should I Think About Retirement Planning?
When you’re in your 20s and 30s, retirement can feel light years away, but it will get here much quicker than you can imagine. And when it does, you’ll want to be prepared.
And for those in their 40s and 50s, remember that it’s never too late to start saving for retirement. The most important thing is to just start.
Here are some tips for getting started:
- Create a retirement budget. Look at your spending habits over the past six months including necessities such as rent or mortgage, food, utilities and automobile expenses. Your retirement plan should look resemble your current budget, with adjustments for cost of living or inflation. Things will likely change as you get closer to retirement, but have a solid retirement budget in place, and updating it regularly can go a long way towards helping you meet your savings goals.
- List the income sources you expect to receive when you retire. This may include the 401k you’re contributing to at work (if you’re not currently contributing, start ASAP), monthly social security payments, and any other investments you may have, such as stocks, bonds, or money market accounts. By combining your average expenses with your expected income, you’ll get a better idea of how much you need to save prior to retiring.
- Pay off your debts. Aim to pay your debts off prior to retirement. This will significantly increase the amount of available cash you have each month.
- Factor in the cost of health insurance. Not all health care related costs are covered by Medicare, so it’s important to include the cost of a supplemental plan. As you get closer to retirement age, you may also want to consider purchasing long-term care insurance, to help pay the costs of long-term or nursing home care.
- Stay on top of your retirement savings. Checking in monthly is important; allowing you to review market changes and see performance details. It can also help you analyze under-performers and perhaps even give you reason to invest in other areas to increase return, or minimize losses. But you’ll never know if you don’t keep abreast of the accounts.
- Consider where you live when determining your retirement costs. Some states are more retiree-friendly than others, and if you live in a more expensive state, you may want to consider relocating to an area where your money will go further.
Planning will go a long way towards helping you enjoy your retirement.