How to Prepare Your Finances for Retirement
Saturday, May 6, 2017, 6:00 AM | Leave Comment
The basic foundation of retirement planning is making sure you have enough savings in a portfolio that’s sufficient for you to enjoy a comfortable lifestyle through your retirement years.
Conscientiously saving and smartly investing your money during your working years are key, but that’s just the beginning.
There are other steps to take to improve the state of retirement plans.
Let’s look at five ways to get a good head start on your future finances.
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Cut Down Your Expenses
When you cut your living expenses now, this enables you to save more money for the future.
Also, you’re getting yourself and your family used to living on less money, so life in retirement won’t be such a major adjustment.
Pare away all unnecessary expenses, i.e., things you can do without. For the things you do need, find ways to buy them less expensively.
Use coupons when you buy food. Look over your insurance policies to check if cutting your premiums, while still maintaining adequate coverage.
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Estimate Your Retirement Income
Estimate your monthly retirement income by first finding out what your Social Security benefit will be.
Total up any pension income you or your spouse may be entitled to, then add in 4 percent of your total financial savings you’ve set aside for retirement.
This should include all IRAs, 401(k)s, bank and brokerage accounts, and any other sources of income. The total is your gross monthly retirement income.
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Estimate Your Expenses
Estimate what your monthly expenses will be at retirement. Include items such as utility bills, property taxes, insurance premiums, out-of-pocket medical expenses, food, mortgage/rent and so on.
Balance this figure against your estimated retirement income to determine if you’ll have enough to cover your expenses.
Check your 401k resources you might have with your employer to see if you’re saving enough.
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Reduce Your Debt
If possible, pay off all your credit card debts and/or loans. A stress-free retirement is possible if you have little or no debt.
Especially in your final years of working, it’s a good idea to focus heavily on savings and debt repayment.
Also, be sure you don’t continue to create more debt.
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Health Care
Health care costs can be one of your biggest expenses in retirement.
Before you retire, find out what health insurance options will be available to you.
Medicare starts at age 65, so you’ll need to plan how you will be covered if you retire before then.
With planning and accurate estimations, your careful preparation for retirement can mean enjoying your twilight years stress-free and comfortably.
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Eileen O’Shanassy is a freelance writer and blogger based out of Flagstaff, AZ. She writes on a variety of topics and loves to research and write. She enjoys baking, biking, and kayaking. Check out her Twitter @eileenoshanassy.
