Start preparing today for the lifestyle you desire and the financial resources you will need to achieve it. A happy and meaningful retirement implies different things to different individuals.
For you, it may entail shifting from a full-time profession into rewarding part-time work. Or perhaps you imagine spending more time with your family, developing a garden, or playing golf regularly.
Here are ten steps to help you get there.
Step 1: Define your retirement
You likely have a concept of how you would like to spend your retirement years. Think about your objectives here, starting with the most critical ones.
Focus on ideas instead of finances for the time being, and be as specific as possible. For instance, list “trips to the lake” or “walking tours overseas” instead of “travel.” Instead of “remain active in my community,” put “volunteer with children once each week.”
Try to reduce the list to five primary objectives. Be practical: Ensure that your financial demands are satisfied before brainstorming and eliminating superfluous spending. Your retirement will be more tangible the more you describe it. This can help you maintain focus on a set of realistic goals, making each of them more accessible.
If your objectives are still broad or undefined, that’s OK. You might begin by describing how you plan to enjoy your retirement.
Step 2: Evaluate your “assets”
Be aware of your monthly income, your bank account balance, and the amount in your retirement account. Consider atypical retirement assets. Maybe you collect antiques or refurbish autos, and you may be a skilled musician or have a novel you wish to complete.
Many interests and abilities may be transformed into genuine money after retirements, such as trading antiques or teaching piano. Take the time to compile a list of your interests and atypical talents, and then consider how you may transform these abilities and pastimes into money-making ventures.
Step 3: Assess your health immediately
To make the most of your retirement and life, you should be in the best health possible. A small amount of preventive medical care may go a long way.
Schedule your preventative examinations and screenings today, from a yearly physical to a dental cleaning. Work with your provider at each appointment to develop a strategy to enhance or maintain your health. Commit (or recommit) to good nutrition, exercise, and adequate rest.
Living a healthy lifestyle need not be a chore. Numerous nutritious meals are delicious and satiating, and exercise may be enjoyable. Commit to maintaining your mental acuity through brain games, puzzles, and reading.
Staying in regular contact with family and friends can also help you maintain your physical and mental health and will assist you in combating any retirement-related depression.
Step 4: Create a budget for retirement.
Your budget should contain the following:
- How much money is being brought in?
- What will the cost be to accomplish the objectives
- How much debt a person has.
Begin by keeping track of your income and spending for a few months. Next, determine how much money you need to fund your desired retirement lifestyle. You should also evaluate your investments (Is your portfolio diverse? Are you spending a ton in fees?) and ensure that your budget provides for debt repayment.
A basic rule of thumb is that you will need 80% of your working salary to maintain your quality of life in retirement. Social Security is meant to replace approximately 40 percent of the average retiree’s pre-retirement wages, so you will need to develop additional sources of income. Consider strategies to earn extra money, such as finding part-time work, selling some of your possessions, or moving to a smaller dwelling.
Consider that the 80 percent level may not account for extras like travel and hobbies since discretionary spending tends to be higher in the early retirement years when you are more active and healthy.
Step 5: Determine when to begin Social Security benefits
Older folks will make this most crucial decision about their retirement funds. According to research conducted by the Social Security Administration in 2021, almost one-third of older Americans rely on the program for at least 75 percent of their income.
The age at which you begin receiving retirement benefits will directly influence the monthly amount you receive. You and your family will benefit more if you wait to begin collecting Social Security (up to age 70).
How much bigger? You are not eligible for the entire benefit based on your lifetime earnings history unless you reach full retirement age. If you file for benefits before age 62, you will get between 70 and 99 percent of your benefit amount.
Delay retirement credits are available if you wait over the full retirement age, enhancing your monthly payment until age 70.
Step 6: Decide whether you want (or need) to work.
The fastest-growing age group in the labor force is those aged 65 and over. For many older employees, it’s a straightforward cost-benefit analysis: Unless you are financially secure for life, you will need to stretch limited funds or remain in work to help fund your retirement goals.
Consequently, when determining your retirement objectives, you should evaluate if and how much you will need to work. Do not wait till your retirement to decide. Consider the advantages and disadvantages of continuing to work: Part-time, full-time, or freelancing. Continue your career or try something different? The sooner you get familiar with your options, and what they may entail financially, the more secure your retirement planning will be.
Step 7: Establish connections via social media and other ways
Even in retirement, you need to create and maintain your network. Utilize in-person and online chances to promote your expertise. It is OK to brag to people who could assist you in achieving your retirement goals.
The epidemic has made digital networking much simpler and more acceptable. You may spend an hour every day “conversing” with others about your talents and interests on Twitter, LinkedIn, or Facebook, or you could form a Zoom group to debate ideas with other soon-to-be retirees. The more your physical and online social engagement, the more possibilities you will likely generate for yourself.
If asked how you can contribute part-time to an organization or cause, prepare clear, direct responses. While your network.
Step 8: Find fresh strategies to reduce your spending.
Start saving immediately, whether your retirement is years away or imminent. It will constantly improve your preparedness.
That doesn’t mean you have to put all your excess cash into retirement accounts, but there’s never a terrible moment to reduce costs and save.
List your expenses and seek methods to reduce them. You may not need to subscribe to four streaming services or dine out thrice weekly. Even sacrificing one movie night each month might help you reach your retirement savings objectives.
Do not disregard your debt to save more money. Reducing debt today will make retirement less stressful. Numerous people succeed with the following strategy: pay off your lowest obligations first, regardless of their interest rates. This provides you a sense of success and the confidence to tackle larger obligations, knowing you have the resolve to do so.
Step 9: Anticipate the unexpected
Few of us enter retirement with pessimistic expectations. Who could have foreseen that a global epidemic would lead to an influx of early retirements and skyrocketing inflation? But occasionally, it occurs.
Prepare now for the unexpected, and you won’t be surprised later. Consider how you would respond to and pay for everything from simple situations such as a roof leak to life-threatening illnesses. Discuss major topics with your closest companions. How much would significant home repairs cost? What would you want or require in the event of a medical emergency? Do you have the means to provide care?
Next, evaluate your protection. Have you purchased sufficient homeowner’s insurance to cover a severe catastrophe? Is your health or long-term care insurance sufficient? If your coverage is inadequate, the time has come to expand it.
Step 10: Adhere to the strategy.
Humans are creatures of habit, and we usually revert to old practices even when pursuing a new path. This might make it difficult to adhere to your plan, but it is very rewarding.
Ask questions and seek guidance, including from specialists, without fear. A millionaire is no longer required to consult with a financial planner, and they can help you remain steadfast when your emotions urge you to flee.