It is never too early to begin retirement planning. Unfortunately, many people put it off. If you are wondering what you can do now to ensure you are set for retirement – even if it is decades into the future – consider these five tips.
Consider Your Retirement Activity Plans
People dream of their retirement, expecting to be comfortable. But many are unsure how to make the transition to a “life of leisure” once the time arrives. In order to make sure you have enough money to truly have leisure time, you need to determine how that time will be spent.
Are there dreams you have postponed until after you stop working? Do you want to travel? Are you hoping to stay active in your community? Will you be sharing the activities of your retirement with an also-retired spouse? The important thing is to get a handle on your retirement activity plans, so you can do what it takes now to make these dreams a reality.
Create a Savings Goal
Once you know how you intend to spend your retirement years, you can begin planning how much money it will take to live that way without a steady employment income.
Questions to ask yourself:
- Realistically, how much will it take to maintain your current lifestyle?
- Do you plan to drastically change that lifestyle once you retire?
- What will you add and subtract from the way you live now?
- What does your retirement income future look like, including savings, social security, pensions, etc?
Your goal is to create a ballpark figure you can work toward that will allow you to make your retirement dreams a reality. Once you have a number range in mind, you can better plan to accomplish that savings nest egg goal.
In addition to saving money for healthcare costs as you get older, there are a few specific things you can do now and in the years leading up to retirement that will help you ease the financial burden of your health as you get older. Investing in long-term care insurance is one of the best moves you can make now to protect you in the future. Some say it can be costly, but should you become seriously ill in your senior years long-term care insurance will help protect your savings by paying for a large part of the medical expenses. Plans vary so shop around.
The sooner you begin to pay down your debts the better your retirement funds will be. Avoid taking on any high-interest debt as you near retirement and focus on paying your higher interest loans as soon as possible. Ideally, you will have no debt by the time you reach retirement, but if this is unreasonable, focus on reducing it as much as possible.
Hire a Financial Advisor
If you are not already working with an expert to help you plan for retirement, now is the time to find someone. Your investment needs are going to change over the years and having a professional in your corner can really make things easier. Discuss the plans you have for retirement with your financial planner and let him or her help you create a plan that will get you to the point you want to be by retirement age.
The most important thing to remember about retiring is there are very few rules that are hard and fast that apply to every situation. Some people don’t even want to retire because they enjoy working and fear they will get bored with no job. Others want to retire earlier than usual or are willing to work just a few extra years to build up additional savings. Every individual has his or her own unique situation and should plan accordingly so retirement can be an exciting life transition.