Retirement planning is a life task that individuals need to be thinking about sooner rather than later especially when you consider how high the stakes are to make certain you're financially secure.
Follow these five steps to freedom and a happy retirement!
Worrying about money is not something many individuals want to worry about in their twilight years, but lack of prior planning sometimes means our aging parents need to make choices between aging safely in place, or having to move in with a family member.
Getting a grasp in financial freedom and addressing money issues early in your working years makes the most sense even though retirement may seem such a long way off that the concept is difficult to grasp.
Here are five steps to take now to make your golden years as enjoyable and financially secure as possible:
- It's never too late to establish a budget for your retirement. The best way to prepare is to determine how much money you will need to comfortably survive when you retire. Calculate your debts and expenses and weigh it against your anticipated income. Analyze the figures and make changes now, if possible, to address any shortfalls.
- Don't ignore inflation when calculating living expenses. Your 2013 budget will likely look dramatically different than your 2022 budget. Establishing a budget now is an excellent start, but account for inflation in both income and expenses.
- Don't be too aggressive in your investments. When individuals near retirement, their first impulse is to become aggressive in investing in stocks. Most financial advisors caution that stocks are one of the most high risk retirement planning methods available. Diversify your investments into various funds and sources to prepare for your assets and check with your financial adviser on how best to distribute your retirement funds.
- You will need to calculate your life expectancy. Bear in mind that there is a 50 percent chance that you or your spouse could exceed the average life expectancy. Make certain you take that into consideration when planning your budget and your savings. Add an addition 10 to 15 years to the amount of time you will live.
- Don't rely on Social Security to carry you through your golden years. Inflation does play a role in the amount of Social Security an individual receives but the rate of increases in this payment rarely keeps up with inflation. It's never clear what programs or benefits the government will cut to balance the budget and even though you may have worked to earn the Social Security payment, its receipt is no longer a given.
Setting up a budget and making plans for retirement also includes taking steps to remain healthy and active. If you plan to age in place, it's also a good idea to take a critical look at the family home and age-proof it for safety. Additionally, when making budgets and plans for aging, consider equipping the home with a medical alert device, these devices can be purchased for pennies a day, but the peace of mind it offers is priceless.