Retirement is, unfortunately, one of the least in our priorities as career people. We tend to give our attention to acquiring properties, buying our dream cars, going on trips to exotic locations, and providing for our families.
While all of these things are good to have, retirement planning should never take a back seat. After all, we’re talking about almost three decades of your life spent after you hang up your jersey at work. You wouldn’t want to be in lack during your golden years, right?
7 Practical Tips to Help You Plan for Retirement Better
1. Get rid of your debts
While you’re still working, eliminate your debts as soon as you can. You wouldn’t want to go into retirement with your debts chasing you.
If you can accelerate your mortgage payments, do so. If there are opportunities to pay off your credit cards and other loans in larger amounts, go ahead and take them. Make it your goal to retire debt-free.
2. Build your emergency funds
If you do not have any outstanding debt, or as soon as you’re done paying them all off, build your emergency funds.
Ideally, emergency funds should be at least six months’ worth of your expenses in liquid asset form. In case something bad happens or the economy takes a beating and you lose your job, you have enough money to sustain your expenses while you look for another means of steady income.
This is also important even if you are already at the retirement stage as there are unavoidable circumstances that could delay your pension. Emergency funds help get you through while waiting for your retirement income.
3. Diversify your investments
Do not put all your eggs in one basket. Learn to diversify your investments. Having a well-balanced portfolio can help secure your future financially.
Consider different forms of investments such as stocks, bonds, mutual funds, real estate, a 1031 exchange property, and other assets that are within your risk tolerance. These investments, when done right, can fully fund your retirement and give you a more comfortable and enjoyable post-career season.
4. Take advantage of retirement accounts
Another source of retirement income you can look into are retirement accounts. Consider taking full advantage of these if you still don’t have one, especially those that allow catch-up contributions.
If you think these retirement plans are complex and hard to understand, you’re mistaken. A lot of available retirement plans are now easy to understand. You just need to do your research.
Talk to financial experts and planners to help you identify which plans are best suited for your needs and projected retirement lifestyle.
5. Calculate your income and budget for retirement
Another important aspect of retirement planning is projecting numbers. Calculate how much income you will get regularly based on your Social Security pension, investments, retirement accounts, and other sources of income.
Make a separate list for your budget based on how you want to spend your days as a retiree. Factor in all of your daily needs and wants, whether they be regular vacations, hobbies, or other leisure activities.
6. Take medical costs into consideration
Let’s face the hard facts that as we grow older, our bodies will get weaker. You have to factor in health and wellness costs when you plan for your retirement.
From fitness club memberships to medication, taking care of your health will be costly. That being said, you have to consider protecting not just yourself but your retirement income as well.
In most cases, Medicare will take care of your routine health care expenses provided you are 65 years old and above. Supplemental coverage can help pay for your non-routine needs. Long-term insurance helps ensure your nest egg’s safety.
7. Identify where you want to retire
Where you retire will have a great deal of impact on your finances. Different cities have different costs of living, tax rules, quality of life, and health care provisions. Know which cities are friendly to retirees and see if any of them fits the life you want to live in your golden years.
It’s never too early nor is it too late to prepare for retirement. Whether you just started work or are just ten years from retirement, take time to sit down and plan for your life after work. You’ll thank yourself later in life for setting things in motion now.