Retirement planning isn’t just something that’s nice to do because it gives you a little peace of mind; it’s vital if you want to live out your twilight years in comfort and contentment.
The problem that most people have is that they don’t know where to start, and the idea of planning for the future can seem daunting and difficult, especially when you’re already dealing with a ton of stress in your day-to-day life.
Luckily, we’ve got you covered. Here’s what you need to do to secure your future in ten easy steps.
Step #1: Assess Your Current Financial Situation
By getting a good idea of your current financial situation, you’ll be able to take your current savings and to project them into the future to get a feel for how much your savings might be worth by the time you retire. This isn’t always easy, and so it often makes sense to use financial calculators to help you out.
Look out for common red flags rather than something that should be avoided unless you need cash in an emergency and you don’t have any savings. Speaking of savings, try to start putting some money aside as early as possible. The longer you leave it, the more difficult it is to get started.
Step #2: Set Clear Retirement Goals
They say that if you fail to prepare, you prepare to fail, and that’s never truer than it is when it comes to your retirement. Whether you’re exploring flexible job opportunities for seniors to supplement your income or looking for ways to stretch your savings, proper planning can make all the difference in ensuring a comfortable and fulfilling retirement. That’s why it’s so important for you to set clear goals that you can track both as you approach your retirement and as you live out the rest of your life.
Factors to consider while setting these goals include the age you hope to retire, your estimated weekly, monthly and annual expenses, and any particular goals that you have for that phase of your life. For example, if you plan to spend your retirement traveling around the world, that’s going to cost a lot more than if you plan to spend it pottering around the garden.
Step #3: Create a Retirement Savings Plan
If your employer offers a retirement plan (such as a 401k), most experts recommend contributing the maximum amount allowed, especially if there’s an employer match in place. Many employer-based retirement plans offer great tax benefits, and when you combine that with the compound interest on offer, these plans become a no-brainer.
However, it’s also a good idea to consult a professional financial advisor, because they’ll be able to look at your specific situation and give you tailored guidance on how to make the most out of your money. It’s all about getting the biggest bang for your buck, except you put the buck in now and get the bang when you retire.
Step #4: Maximize Investments and Diversify
Providing investment advice is beyond the scope of this article, and so be sure to carry out your own research. With that said, gold is generally a safe bet, and so you’ll want to familiarize yourself with the best gold IRA companies and to get to know how IRAs work, to determine if they fit your goals.
Maximizing your investments goes above and beyond just picking a safe bet and putting all of your money into it, though. Instead, diversify your investments by spreading them across multiple different areas.
I like to follow the 70:20:10 rule, which means that 70% of my investments are for safer investments like gold and tech, 20% are for medium-risk investments like hospitality and lifestyle companies, and 10% are for high-risk, high-reward investments like shares in a hot new start-up.
Step #5: Plan for Healthcare Expenses
Healthcare expenses are a part of life, whether we like it or not. Everyone needs healthcare at some point or another, but the quality of that care will depend upon how much you’re able to pay for it. You can give yourself the best possible chance of a positive outcome by putting some money aside and taking out insurance.
As part of this, you’ll want to research the best health insurance companies for your given situation, working with a broker if necessary or if the research process makes you feel overwhelmed.
Bear in mind that you may be able to save money by switching insurance companies over time instead of taking out a single policy and sticking with it. Set yourself a reminder to regularly revisit the marketplace.
Step #6: Minimize Debt Before Retirement
Start by understanding the debt that you currently have, which you can usually do by spending a couple of bucks on a credit report. Your next step is to look at the options you have for reducing that debt, whether you’re paying your mortgage off early or you’re making monthly payments to bring down that credit card debt.
Nearly 50 million Americans are struggling with student loan debt, so don’t feel like you’re alone if you’re one of them. You’ll also want to think about credit card debt, mortgages, loans and overdrafts on your current accounts.
At the risk of sounding like a broken record, be sure to consult your financial advisor to find out the different options that are available to you. They’ll also help you to prioritize which debts you pay off so that you minimize the amount of interest you have to pay.
Step #7: Stay Updated on Tax-Advantaged Options
In case you haven’t heard the term before, tax-advantaged options are essentially strategies, investment options and other approaches that allow you to minimize the amount of tax you’ll have to pay.
Now, we’re not saying that you shouldn’t pay tax at all, because that’s a great way to end up in a jail cell. With that said, why pay more tax than you need to? Taxation follows rules and regulations, and if you understand those rules and regulations then you can often find ways to save a little cash while complying with them to the letter.
The tax-advantaged options that are available to you can change over time and depend upon your personal circumstances, so be sure to do some research and to revisit that research from time to time. With that said, you’ll want to start by looking at 401(k)s and IRAs, including traditional IRAs, Roth IRAs, SEP IRAs and SIMPLE IRAs.
Step #8: Develop a Sustainable Withdrawal Strategy
Your withdrawal strategy is essentially the approach you use to take money out of your pension when it’s time to retire. For example, will you take out a bulk sum each year, or will you make smaller withdrawals each month?
Developing your own budgeting methods can be vital to the sustainability of your withdrawal strategy, because if you burn through all of your savings within the first five years of your retirement, you risk taking a huge hit to your standard of living. You may even need to go back into part-time work just to make ends meet.
Sustainability is the key word here, because if your strategy doesn’t work and you have to keep on dipping your fingers back into your pension pot, all of that budgeting will have been for nothing.
Step #9: Keep Revisiting and Adjusting Your Plan
They say that no battle plan survives contact with the enemy, which essentially means that no matter how much effort you put into planning your retirement, you’ll still have to make changes over time.
Make a note to regularly revisit and adjust your plan, going back through the steps that we’ve covered today. Remember that organization is still important in retired life, in part because if you’re not organized then you’ll have no way of knowing whether your plan is working out.
Every six months or so, go back over your goals and confirm that you still want to aim for them. Assuming that you do, the next step is to see whether you’re still on track. If not, it’s time to adjust.
Step #10: Enjoy Your Retirement
Remember that the whole point of this careful planning is to make sure that you’re able to enjoy your retirement and to live your life to the fullest.
If you’ve followed all of the steps that we’ve shared to this point, then you should be in the perfect place to do just that. You’ll be able to enjoy your retirement and to spend your time doing what you love, rather than worrying about money or wishing you’d started planning sooner.
The tips we’ve shared today should help to make retirement planning easier than ever before, which means that there’s no excuse to keep putting it off. Remember, the earlier you tackle retirement planning, the more effective your planning will be.
Better still, we’ve structured this list so you can follow it along from one step to the next. If you’re still finding the process to be overwhelming, try tackling it by doing one step per day until you’ve worked through the list from start to finish.
You’ll have your retirement plan finished in no time!
