What do you see for yourself when you picture retirement? Is it too far in the future for you to have a clear picture or are you already terrified that you are not prepared?
Would you like to know how to retire in 10 easy steps?
While each individual plan for retirement will be different, there are some common factors everyone needs to consider to have a happy retirement.
Here are 10 steps to create a plan that suits your goals, from your finances to your health and hobbies.
1 Visualize Your Lifestyle
The best way to start your retirement plan is to visualize your lifestyle. While no one can predict the future, today is a good day to think about your ideal life. Ask yourself some questions and write down the answers to get a better idea of what your requirements might be.
At what age would you like to retire? It is easy to think 65, but would you rather retire at 55 or maybe even 45?
What standard of living do you intend to have? Do you plan to have a large house, small condominium or go place to place in a luxury RV?
Do you plan to continue working after you retire? Do you intend to keep working in your career, freelance as a consultant in your area of expertise, or volunteer for one of your favorite pursuits?
What is your ideal place to retire? Will you stay where you are or move to a sunny destination?
What interests do you intend to pursue? Will you keep following your hobbies, travel or start new leisure activities?
2 Dive In!
Most Americans have not considered how much they need to save for retirement. One third of Americans don’t have anything saved in their retirement accounts, according to Time.
So, take the plunge and dive in! The sooner the better – you can never have too much saved!
If you started with $1000 in an account that offers 5% yearly returns of compounded annually and added $100 per month to it over 30 years you would have accumulated over $80,000!
If you already have a plan, keep going and add as much as you can to your account. Needs change over time and you can never be over prepared.
3 Learn About It
Financial planning information can be intimidating. One of the major reason people don't invest is a lack of knowledge.
No matter what your personal strengths are, it is important to know about your own finances and savings strategy. Take courses or read up on investing: market trends, diversifying your portfolio, fees.
Find the best way to learn that suits your learning style.
If you have a financial advisor, speak openly, and make sure you understand their advice. A good advisor will explain financial concepts in language you can understand, and clearly disclose fees to offer you a customized plan.
4 Master A Plan!
Draft a multi-pronged plan that suits your specific needs and goals and addresses any challenges you may have. A good plan will include management of any debt, developing a budget and planned investment.
If you have high-interest debts, prioritize paying these before aggressively funding your retirement plan.
Create a budget so you know how much you have to spend and save each month. If this is challenging, set up an automatic deduction from your account that goes into savings. Take advantage of any 401(k) matching programs where you work. Transfer money from your savings account at the bank to higher interest accounts or an IRA.
5 No Financial Fit-Bit
It is important that you monitor your accounts. This is true whether you use a financial planner or manage your own investments. Even though your portfolio may go up and down with market fluctuations, review the performance regularly – at least every three months. Monitor how much you are paying in fees, and your rate of return. Avoid any emotional decisions based on market fluctuations and make carefully considered adjustments as needed.
If you are approaching retirement, market conditions may indicate the time to move your assets to a less volatile and more easily accessible fund.
6 Curb The College Plans
In your working years, resist the temptation to channel your funds to your children’s college account. Your own retirement comes first. Your child can borrow for college, but you cannot borrow to finance your retirement.
In addition, college financial aid formulas reward those who saved early for retirement because what’s already in your 401(k) and IRA isn’t counted as available funds to pay college bills.
If it does not compromise your retirement savings, set up a qualified tuition plan. A 529 plan, which is a tax-advantaged savings plan, is designed to encourage saving for future college costs.
7 Location, Location, Location
Take the time to consider where you will live in retirement. You might want to move close to family, soak up a warm climate or be close to a leading health care facility. If you are willing to downsize as part of the process, you will be able to reduce – or eliminate – mortgage payments and minimize maintenance costs.
There are several states that don't tax Social Security or pension income. Some are in more temperate climates like Florida, Nevada, and Texas.
Determine whether you might prefer a more remote and tranquil setting or if you envision yourself in an urban environment that offers lots of amenities.
The sooner you explore your options, the easier it will be to plan for your ideal retirement.
8 Endeavor For Unlimited Choices
The goal of any well thought out retirement plan is to give you the option to pursue your heart’s desire in retirement. Whether that is relaxing at home, being closely connected with your family, pursuing hobbies or traveling the world. You may choose to volunteer, keep working or offer your experience as a consultant.
Whatever your preference now could change over time so a solid plan with an ample budget will give you the maneuverability to change things up and pursue new passions as you grow older.
9 Good Health Is Priceless
Poor or declining health is one of the top reasons workers retire before they planned to, and before they’re financially ready.
A sedentary job can contribute to many long-term illnesses like diabetes and heart disease, according to an article from U.S. News.
If you are in good health, make the time now to maintain it with proper nutrition and activity. If you have challenges or a family history of medical issues do whatever you can to minimize your risks in the future.
Plan for your wellness as you would plan for your finances. If you suspect you will need care for certain conditions, come up with a potential budget for these expenses in retirement. The worst outcome is that you will avoid these issues and have extra money for happier expenditures.
10 Get The Skinny On Social Security
Stay on top of any changing requirements for social security benefits.
Be sure you have an understanding of your benefits based on the Full Retirement Age (FRA) based on your year of birth. You may claim benefits as early as 62, but delaying your claim can increase your Social Security income by a significant amount.
If you start your benefits between your Full Retirement Age and age 70, your benefits could increase by 30%.
If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much.
-Jim Rohn
It takes discipline, but living within one’s means is key to accumulating wealth. Being financially responsible in the present is a good way to ensure a comfortable future.
These steps are good places to start a more conscious and directed route to achieving your financial freedom. Read, reflect and take what will work for you.
Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs and desires. Get the help you need to achieve financial freedom.
Above all, believe in yourself and believe that you will achieve your goal!
Above all, believe in yourself and believe that you will achieve your goal!
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Sources:
Lynda at Sonoran Sun | Private Equity Investments
Sources:
Lynda at Sonoran Sun | Private Equity Investments
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