Lots of folks are excited about retirement, but hate the notion of really preparing for it. This is because of many different reasons. But, it is a thing that requires planning. Exactly what is it that we must understand about it? Read on to find out!
Figure out exactly what your retirement needs and costs will be. Studies that have been done state that the average person needs about 75 percent of what they normally make today in order to survive retirement. The less you make, the higher that percentage will be.
Spend less of your money on unnecessary items. Make sure to fully list out everything that you spend on now, and be strong enough to decrease the amount of things you don’t really need to spend on. When you look at these expenses over 30 years, they become quite a large amount.
Think about retiring partially. It may be wise to think about partial retirement if you are interested in retiring but are not in a financial position to do so just yet. It involves working part-time in your current career. You’ll be able to relax some and can still make money until you’re ready to switch to a full retirement later on.
Make contributions to your retirement plan. If your employer offers a matching amount, make sure you maximize it by contributing the full amount allowed to your 401k. You can put money into your 401k before taxes, allowing you to save more. If you have an employer that matches what you contribute, you’re basically getting free cash.
Once you retire, what excuse is there not to stay in shape? Healthy bones and muscles are more important now than ever, and your cardiovascular system will also benefit from exercising. Work out every day so that you can enjoy your retirement years to the fullest.
Examine any retirement savings plan provided by your employer. Most companies offer a 401(k) plan that you can enroll in. Be sure you understand everything there is to know about your retirement plan.
Even after age 50 it’s still possible to play “catch up” with your IRA contributions. IRA’s normally have a limit of $5,500 per year of contributions. If you are older than 50, this yearly limit grows to around $17,500. This is perfect for those people who got a late start, but still want to save big.
Your retirement plan should be based on a similar lifestyle you have. Since you will not be working any longer, it is safe to say you will need around 80 percent of your current income. Just try to avoid spending too much extra cash in this new free time.
Retirement is a great time to get to know grandchildren. Your kids may even use you as a babysitter. Plan enjoyable activities to share with your grandchildren. Don’t overexert yourself with watching the children.
What kind of income do you have for when you retire? Calculate Social Security, interest on your savings, and any pension plans that you have accumulated. The more varied your income, the more stable your financial situation will be. Can you create other income sources?
No matter how bad your financial situation may be, never tap into your retirement savings until you are actually retired. That’s borrowing from your future, and you’ll lose valuable investments and interest. You might also face penalties and negative tax consequences. Hold off on using retirement money until you’re really in retirement.
Be sure you’re enjoying this time. Life can get hard to navigate as you age; however, that is even more reason to take a step back and ensure that you do something each day that reaches your inner self. Pick up hobbies you’ve always wanted to try, and fill your days will happiness.
Clearly, it does not have to be hard to save for the retirement years. It requires a bit of discipline, but the end result will make it worthwhile. Following the advice presented here will ease your transition.