Are your golden years steadily approaching? If so, you’re in an exciting time of your life. You’re close to capping off your established career, and you’ve raised a loving family, which means it’s almost time to celebrate your hard work and dedication. But are you ready for retirement?
Unfortunately, not many seniors have saved enough money to live in retirement comfortably. It’s recommended that you should have about 80 percent of your annual income saved for each year of retirement. So, if you’re annual salary was $60,000, you should have $48,000 for each year of retirement.
While this may sound unfathomable, it’s not impossible. There are plenty of ways you can grow your nest egg so you can sip your daiquiri on the beach or explore Europe without stressing about your finances. Take a look at our tips for future planning below.
1. Save early
It’s never too early or too late to begin saving for retirement. While the former is recommended, you can still start saving even if you’re near retirement. The best way to save for retirement is by taking advantage of your employer’s retirement plan if they offer one.
A 401(k) is an employer-sponsored retirement plan that allows you to make contributions with pre-tax dollars. What does this mean? It means your taxable income will be reduced and you won’t be taxed until you withdraw money in retirement. Additionally, many employers offer a 401(k) match, which is pretty much free money. To take full advantage of this, contribute at least up to your employer’s match. If possible, contribute up to the max.
Other ways you can begin saving for retirement to improve your long-term financial health include:
- Individual savings accounts
- Investing in real estate, stocks, bonds, etc.
- Individual Retirement Account (IRA)
You can also save money for retirement by picking up a second job or working remotely as a freelancer in your free time, reducing your spending on unnecessary items, and refinancing your debts.
2. Reconsider your home
If you live in a larger home, you may want to reconsider living there. Over time, your children will move out, and you’ll no longer need all the space that’s required for raising a family. Additionally, as you age, it may be more difficult for you to go up and downstairs and care for your home. This means you may want to downsize and move to a smaller home that’s cheaper and requires less upkeep.
Searching for a new home and downsizing will allow you to save money on your mortgage payments, property taxes, and utility bills. This will enable you to save more money to pursue your interests in retirement, such as traveling or picking up a hobby.
When your income takes a hit due to retirement, you need a backup plan. Using your home value is one such plan, but doing it with a reverse mortgage may be better than applying for a traditional mortgage. To find out you have to do some research and then apply, if you meet the requirements. For example, you must live in the home you own that is the subject of the mortgage application. You must also be 62 or older. Provided you meet the requirements, the reverse mortgage lets you take money out of your home equity and put none of it back until the loan agreement is invalidated. That can take many years, since it usually occurs when you vacate the home.
But what will happen to my spouse? This is a major concern for many who take out a reverse mortgage. A non borrowing spouse will be able to defer foreclosure to remain in the home after their partner has passed.
3. Protect you and your loved ones
During retirement, it’s important you protect yourself and your loved ones. This means purchasing insurance that will keep you and your loved ones healthy. With life insurance, you’ll make monthly premium payments. When you pass, all of your benefits will be available in the form of a lump sum, which will be available to your beneficiaries, such as your wife or children.
You can compare affordable senior life insurance quotes free of charge at Reassured.
You also want to make sure you have adequate health coverage. As you age, you may be more prone to injuries, illnesses, and diseases. This means you want health insurance that will keep your nest egg in good standing without drowning in medical debt. In some cases, you may need to be placed in a nursing home, which can be extremely expensive. Make sure you do your research and shop for different health insurance options to avoid your retirement savings going south.
Key takeaways
Planning for retirement may sound like a headache, but with proper planning, you’ll be able to enjoy your sunset years stress-free. Saving early, downsizing, and protecting yourself are all crucial tips you must know in order to prepare for retirement.