Would you be prepared to retire tomorrow? Perhaps you are still very young, so you don’t think that you need to be ready. However, you should know that the more planning you do for your retirement, the better life you will have. Some people retire early. Consider the possibilities in the tips below.
Consider how much your retirement costs and needs are going to be. Most people need around seventy percent of their current income just to cover basic necessities during their retirement years. If you are making very little, you’ll need 90% or more.
Contribute as much money as possible to your 401k retirement plan. This plan is set aside to give you the most amount of money when you are no longer working. Talk with your employer and see the amount that they can match and max this out every paycheck that you have.
Consider paying off your mortgage when you cash out any retirement funds. For most people, the mortgage is the biggest bill each month. If you can pay it off, you can substantially reduce your monthly debt, making it easier to live on a fixed income. You will also have substantial equity in your home to pull from in an emergency.
If the thought of retirement bores you, consider becoming a professional consultant. Use whatever you’ve spent a lifetime learning, and hire yourself out for a handsome hourly fee. You can make your own hours, and it will be fun teaching others about your expertize. The money you make can be saved for a rainy day or put toward immediate expenses.
Never, ever touch your retirement savings before you retire. That money only grows over time when left untouched but added to over time. Do not use it to pay for a vacation, a house or even a college education. Find other ways to save for and finance those possibilities in your current life.
Don’t forget to factor in your spouse when planning for retirement. Both of you need to be putting money away to ensure your comfort. That said, what if one of you doesn’t make it to retirement? Will the other be able to live on what money is left at the time?
Don’t count on Social Security benefits covering your cost to live. Social Security may pay roughly 40 percent of household and other expenses, but that is clearly not enough. Many people require 70-90 percent of their current salary to live a nice life after retirement.
If you are establishing a retirement savings strategy and you lack financial discipline, it is wise to never have the amount you want set back to ever be in your wallet. Designate a specific percentage of your pretax income to be automatically deposited into an account such as a Roth IRA or a 401(k). The money will be automatically deducted from your paycheck and essentially takes the decision of whether you want to save or spend the money out of your control.
How will you retire? Are you planning to live on the cheap or live it up? Both choices can be great, but you need to prepare yourself to retire. Take these tips to heart and live a fulfilling life.
