Every year, people retire from full-time work in the millions. While the pandemic has influenced some people to retire early and reshaped the employment landscape for tens of millions of Americans, retirement is on the horizon for everyone.
That reality fills some with visions of post-retirement activities. It fills all too many with the quiet dread that they haven’t done enough to prepare for that inevitable day. If you’re in the second category, keep reading.
We’ll cover five retirement planning tips that everyone needs to know and might help lift some of that dread.
1. It’s Never Too Late
While it might feel like you waited too long, any amount of retirement preparation puts you in a more manageable situation than no retirement planning. For example, contributing the maximum amount to a 401(k) or Roth IRA for 5 or 10 years won’t put you on the same solid ground as someone who contributed for 30 years.
It will, however, create a financial cushion that lets you do some future planning. You can also proactively save cash for the same purpose.
2. Understand Your Needs
A good retirement plan starts with understanding your needs. For some, a modest lifestyle is a way of life, while others like extravagances. If you plan on extensive travel in retirement, you must calculate for that as you decide how much to save for retirement.
If you own a small home outright and plan to live there in retirement, you must plan around annual tax costs and upkeep.
3. Know What You’ll Have Coming In
The payouts you’ll receive from things like IRA or pensions aren’t really fixed until you retire, but you can make some educated guesses. Knowing a rough estimate of what those accounts will provide will help you understand if you need other investments to help you shore up your retirement.
Not sure what to make of your pension. You can head over here for some very useful information on pensions.
4. Use a Budget
A budget is one of the most fundamental tools at your disposal for basic financial health. A budget tells you how much money you have, how much you spend, and how much you save. Sadly, around a third of Americans don’t use one at all.
Getting yourself on a budget makes saving retirement funds much easier.
5. Involve a Pro
If you already do things like using a budget and contributing to retirement accounts, consider getting professional advice. A professional financial planner or investment consultant can help you maximize your retirement options.
Retirement Planning Tips and You
The retirement planning tips above won’t apply equally to everyone. Someone with a good budget and well-funded retirement accounts will mostly focus on issues like understanding their needs and looking for other investment options.
For someone with minimal retirement planning, things like budgeting and simply contributing to retirement accounts will likely prove their main tasks. The key takeaway is that doing something toward retirement planning is always better than doing nothing.
Looking for more financial tips? Check out the posts in the Business and Finances section.