The process of starting your retirement requires a good well-thought out strategy. It’s never too early or too late to adopt rewarding spending habits.
To help you understand the key milestones of retirement and allocate funds strategically, you should assess your own financial situation and consider the best ways to maximize benefits. It’s never too late to take charge of your financial situation as it will greatly impact the quality of your life once you retire.
- Common retirement questions
A few of the key retirement questions workers approaching retirement ask (or should ask) include:
How do I retire?
Leaving your job might be simple paperwork-wise, but by retiring you’re in for an entirely new status. It is a good idea to advise a financial professional to determine how will you be replacing your monthly pay check. It is important to determine how much will you withdraw from your retirement account as well as under what schedule.
At what age can I retire?
This is a simple one: when you can afford to do so. There are constraints depending on how long you need to be with a company to become entitled to company pension. You have the choice to retire early, just make sure you think it through.
How much money do I need to retire?
This is a greatly subjective matter as it all depends on what you plan to do once you retire. Instead of getting frustrated by hearing that you need $1 million to retire, first make sure you write what you want to have money for. An advisor can also help you reach that goal as quickly and painlessly.
Should I take my pension as an annuity or a lump sum?
Although taking a lump sum is appealing so you can finally afford to do all those things you always wanted, tax will eat up a significant portion of the amount. Annuities can lessen this burden as they spread it out while providing you with tax benefits.
What will I do in retirement?
This is the most important question as its answer is essential to a happy retirement. This period might require adjustment and many even end up struggling with depression as they feel confused and lost. Yet, you should see this time as the best time of your life and enjoy the things you love. Find a hobby and do all those things you never had the chance or time for.
- How to prepare for retirement
Unfortunately, financial security never just happens. The same goes for your retirement as it requires planning, commitment and of course, money. Experts estimate that you will need 70 to 90 percent of your pre retirement income to maintain your standard of living once you retire. Therefore, starting to save as soon as possible and being committed to your savings goals is essential. Below are a few tips that can help you optimize your savings.
- Re-examine your budget regularly
By learning about your spending habits, you will identify areas where you can save money more easily. For example, you may find that you are spending too much on buying lunch, and that cooking or planning meals would result in significant savings. Most importantly, treat your monthly savings as an obligatory “expense” and increase them every time you get a raise.
– Reduce your utility bill
The utility bill eats up the largest portion of your monthly expenses. Make your household more eco-friendly. You could invest in smart gadgets that consume less electricity while having much longer life spans. Alternatively, you can simply adopt energy-savings habits such as using the eco-mode on your AV or washing machine. While you’re at it, make sure to compare electric suppliers to identify the best provider and most affordable deal. With so many offers on the market, the difference can be up to several hundreds of dollars in your annual bill so do your research and choose wisely.
- Get rid of debt
Debt isn’t just a simple act of borrowing money that you don’t have. It is also borrowing from your future as every dollar that you pay for that loan plus interest is the dollar you could have invested. If you want to put your mind at ease, debt has got to go.
– Learn about basic investment principles
How you save is just as important as how much you save. This figure will be greatly impacted by inflation and the type of investments you make. It’s also a good idea to diversify your savings into different types of investments. This way, you will reduce risk and maximize your return. Learning about investing could also be a fun activity. Knowledge is always beneficial for one’s financial security.
Make savings for your retirement a priority. The earlier you start to put away money for retirement, the better. Use the magic of compound interest. Devise a plan and stick to it. Remember, savings is a rewarding habit and one that is never too early nor too late to start saving.