One day you will awake and it will be the first day of your retirement. At that moment, a lifetime of habits dealing with money will become crystal clear. Your financial future as a retiree depends on honestly assessing your retirement planning now. It is crucial you calculate how much you must save to be ready for retirement. Every year or so, review both your retirement plan and your progress to make sure you are on your way to a secure future.
MAKE STEADY PROGRESS
Consider your savings progress so far. Have you been consistently stashing money away, contributing to IRA, 401(k), and similar accounts? Have you computed just how much you will spend each month in your post-retirement life? The typical worker has 45% less money available per month after retiring. Yet some retirees do not downsize their life, and they keep spending the same amount each month. If you have chosen a Sunshine retirement living community, how much will it cost to reside in this place? Taking into account Social Security, investment income and any pension plans, how much income will you have per month? Get answers to these questions and make sure you have a plan in place to keep you balanced through the rest of your life.
GET PROFESSIONAL HELP
To check your progress and goals, it is wise to reach out to a professional. Most people are bored by the details of investment accounts and money management, thus it is imperative to rely on someone who knows these details intimately. Hiring an independent financial/investment advisor may be the smartest thing you ever do. They can keep you up to date and let you worry about the everyday nuances.
CONTRIBUTE TO CATCH UP
If you are 50 years or older and have not been saving enough, don’t worry, you can still catch up. Maximize your contributions into sheltered accounts such as IRAs and 401(k)s. Then, consult with a financial adviser to determine your risk tolerance and balance your portfolio for maximum returns. Keep in mind, stocks typically return 10% a year over long time periods, while bonds reliably return about 5% in the short term. Before retiring, most workers are advised to choose at least 50-50 split between stocks and bonds.
SET THE DATE
Will you retire as soon as you are able, or will you delay retirement? Choosing to retire is a life decision that involves much more than financial planning. Some people shift into semi-retirement by continuing to work part time. Some people retire fully, then return to employment within a year or two, primarily for income. Some employees prefer the social and intellectual stimulation of the workplace, and choose to keep working beyond the official retirement age. Remember that Social Security benefits are affected by your age at retirement.
Finally, you should always think of the unexpected when planning for retirement. Consider the possibility of dramatic medical costs. Take into account the costs of extended nursing care. In addition to Medicare, you may need supplemental health insurance. Those unexpected costs are what can ruin you later on, so make sure you have good cushion for your finances going out.