After spending the most productive years of your life working and contributing to our economy, you can finally see retirement approaching in the distance. You begin to ask yourself questions and wonder what life will be like when you end your working days.
It’s that time, and you need to start being serious about your retirement plans. When planning for retirement, it’s essential to set goals, be realistic and consult professionals.
There are a plethora of things to consider when planning for retirement, we can’t go into all of them, but we’ve compiled six essential tips.
Imagine the Future
When preparing for your retirement, you need to sit down and picture yourself in retirement, what do you see, where are you, what type of accommodation are you in, who is around you?
When you have a clear vision of how you want to live during retirement, you can start creating a realistic plan on how to attain your retirement goals.
Estimate the resources needed to achieve your retirement vision, calculate where you are now financially and then estimate how long it will take you to achieve your financial goals.
Invest for Growth
The thought of investing in financial markets can be overwhelming for most people, but don’t let this scare you away from investing in stocks, bonds and a whole range of financial options.
Ensure that you’re investing for growth in the long-term; you might want to consider maintaining a healthy mix of mutual funds, bonds, stocks, and a range of other assets.
To make educated investment decisions, consider contacting a financial planner to assist you in handling the intricacies involved in investing for long-term growth so you don’t make mistakes that’ll negatively affect your retirement plans.
Downsize your Debt
As soon as possible, start making plans to ensure that your financial obligations are fulfilled before you enter retirement.
You might want to consider accelerating your mortgage payments, student loan repayments, and the like. The key is to enter retirement with as little debt as possible; ideally, you should enter retirement with zero debt.
By reducing existing debt and limiting new liability, you control how much of your retirement income will go to interest repayments.
Assign Power of Attorney
By assigning power of attorney, you’re ensuring that your estate is managed according to your wishes in the case that you’re unable to make decisions for yourself or you become incapacitated.
The person you transfer your power of attorney to will have the authority to make decisions on your finances, and this is just a measure to ensure that in the worst-case scenario, chaos doesn’t ensue.
Your ability to save will be a significant determinant to how soon you can retire and is a substantial key to financial success.
Create a mandatory saving plan that automatically deducts a certain amount from your paycheck or bank account and diverts it into a retirement savings account every week or month.
By automating your savings, you don’t have to think about conservation, it’ll happen automatically.
Saving should be the bedrock of your retirement planning.
Estimate your Retirement Expenses
A lot of your spending during retirement will depend on your lifestyle; expenses such as health care may increase as we get older, while expenses like clothing will reduce.
If you plan on travelling extensively during retirement, your expenses might actually be higher than they are right now.
It would be best if you also considered future medical costs; look into expenses that wouldn’t be covered by basic medical insurance like non-routine health care or traditional alternative treatments.