The 3 Keys to a Successful Retirement Planning
We know we’re not alone when we say that planning for retirement is confusing. How do 401(k)s work? How much should you invest? Should you have another retirement account on top of your company account? And, why do you suddenly feel so sleepy every time you try to read an article about how to plan for retirement.
We agree with you. Planning for the future, especially when it comes to finances, can be overwhelming. But that’s not a reason not to think about it carefully. Even the smallest steps you take can make a big difference and lift some of the weight off your shoulders.
So, instead of postponing thinking about your retirement because you consider it’s either too soon or too late to do it, let’s see what you can do today to secure your future.
Outline Your Expectations
Getting at least a vague idea of what you want to do after retirement is the best mental exercise to start with.
Most working Americans expect to retire at age 66, but due to personal resilience or other health issues, recent statistics indicate that more and more people prefer to retire by the age of 61. Knowing which category you are most likely to fit in is an important step in further planning.
If you are a strong and healthy individual, you might consider prolonging your working years. However, you need to take into consideration the fact that only 25% of seniors in the US can find a suitable job as a retiree. But, if you just want to enjoy your remaining years, you could opt for downsizing your properties and decide to travel the world. Also, the option of staying put and taking care of your grandchildren, for instance, is also on display at a senior age. So, think about all your options, put them into perspective and start planning from there.
You may have heard that compound interest is the best way to go about growing money in the long run. Experts recommend saving and investing as soon as possible and then let compound interest (the ability of your assets to generate earnings) work in your favor.
If you haven’t thought about it in advance or if your lifestyle did not allow you to save in your 30s, there are various suitable alternatives you can use now that can help you by the time you reach retirement. Individual retirement accounts (IRA) or programs such as 401(k) allow people after the age of 50 to catch-up contributions so that they can boost savings once they’re closer to the big day.
Even your Social Security fund can prove to be a good investment if you delay receiving payments right away. The reason for that is that benefits increase every month and they add up to a good value in two, three or five years.
Thinking ahead is always the best way to go. As a senior, being able to plan and thus expand your life expectancy is key in keeping you in the best shape possible, both physically and mentally. But as you have learned by now, there is a difference in dreaming away and actually making that dream happen.
Planning for retirement may require a bit of legwork. But that shouldn’t be a reason to stop you from thinking about your future. Start by gathering information and outlining your expectations, and you’ve already taken a major step towards transforming dreams into real life scenarios.