Retirement is a stage of life that many people simply do not prepare enough for. The earlier you start racking up personal savings in your life the better off you will be later stages. Luckily, the saying “better late than never” applies well in this situation.
Setting up for retirement must be your priority when you are in your fifties. Hopefully by now, you’ve paid off all major loans (and also done paying for your children’s education). Here is a list of actions you must take before retirement for you to enjoy it burden free.
Make improvements to your retirement portfolio.
Once you are at the age of 50, you qualify for the “catch-up” aspect of the 401(k) plan. Unless there are limits set in place, you are allowed to allocate $18,000 in your 401(k) account; however after the age of 50, the limit is extended to another $6,000 (pre-tax). It is safe to assume that putting away an additional $6,000 annually will come really handy.
Like we mentioned before, we hope by now you are done paying off most of your major debts and kid’s tuition. We highly advise that you use a major portion of that towards personal savings if this is true. How much overall savings is enough for your retirement to be comfortable?
Before retirement, you should aim to save at least 8 times you ending salary; so if you made 60k annually by the time retired, you should have 480k at your disposal – not including assets like cars and homes.
Make Paying Off Debts a Priority
If you are still in the middle of paying off major debts like mortgage, then you must make paying it off a priority. The best way to handle this is to pay more than what your monthly bill is; not only will you finish paying at a faster rate but also ultimately pay lesser in interest – that’s serious amount of cash that can eventually go towards savings. You will more than likely have to make serious lifestyle changes to be able to accommodate this change but it is a crucial one to make.
Adopt a New Budget Plan To Follow
Plan out a new weekly budget and learn where you make unnecessary expenditures. Learn how to put your needs in front of wants. We are hinting at those random splurges people go on – you know, the ones where you buy things you only care for about a week but they cost an organ. Instant gratification is fine when it occurs sparingly.
Look into some of your utility bills and see if there are corners you can cut – maybe you don’t need a landline if you always use a cell phone.
One of the easiest changes to adopt would be to take your own lunches instead of buying food each afternoon; most people spend about $7-$10 a day on lunch – think about how much that can add up to over the span of several years. Also, we also encourage you to take your breakfast at home and avoid picking up commercial coffee and breakfast regularly.
Post-Retirement Career Plans
The last thing you are probably thinking while planning for retirement is to start another career. The truth is, retirement can be an extremely boring time if you do not find ways to keep yourself occupied; it leads to depression and stress which in turn does damage to your overall physical well-being. Many retirees find earning another degree to be a great time. It allows one to utilize their brain and communicate with young personalities.
Starting a small business or getting a part-time stress-free career as an extra-curricular activity is another great alternative; extra money has never hurt anybody – just remember that the idea is to use time productively.
Consider Postponing Retirement
Many people have a misconception that people retire by 60; if this is you, then it is time you are made aware that you must retire at 67 for you to get all your social security benefits – or you only qualify for smaller percentage.
Great strides made in medicine during the last half century have made it possible to live a healthy long life. By all means are you encouraged to continue to work if you are physically capable – especially if you enjoy your job. Postponing your plans for another year or two will allow you to save significantly more and perhaps give your day a purpose.
Adopt a Healthy lifestyle
It is obvious that body and mind begins to deteriorate as we age – unfortunately, the process becomes faster as the days go by. Add the influence of unhealthy eating habits and lack of exercise, and you’re looking towards an uncomfortable retirement.
Do yourself a favor and make eating right and exercising a priority if you haven’t in your younger days. The cost of medicine and/or medical needs is not the criteria you want to spend all your savings on; making necessary improvements to your health now is the only way to avoid this scenario.