In theory, retirement is a wonderful thing. You’re no longer tied down by a day job and have all the time in the world to spend on the people and things that you love most.
The reality of retirement, however, sometimes looks a bit different. Because no matter your age or interests, living is expensive. And if you don’t have a solid retirement savings plan, you could reach retirement age only to find that you can’t afford to stop working.
The most important part of planning for retirement is getting your finances in order. How do you do it? Read on to find out!
Decide When to Start Saving
In an ideal situation, preparing for retirement happens long before you reach your projected retirement age. Let’s say you plan to retire at 65. By starting at 25, you have a full 40 years to plan and save!
There’s nothing wrong with retiring earlier or later than the typical age if you want or need to. The best thing to do now is to choose an ideal retirement age for you and work backward from there.
Calculate Income and Expenses
It’s difficult to predict factors such as lifespan, so instead, you need to have a firm grasp on your income and expenses. Make a list of how much you make vs. how much you spend in your daily life.
Then, consider how things will change when you reach retirement. Your income for retirement will most likely decrease slightly, but will your expenses?
Think about how you want to spend your retirement years and what those activities might cost. Traveling the world, for example, is far more expensive than picking up gardening.
Organize Financial Goals
The next step is to organize your goals. Depending on where you are in life, your monthly retirement budget might be smaller now than it will be in ten years.
If you have credit card debt or student loans, for instance, you might want to spend more in these categories than on retirement.
Remember, the fewer debts you have once you reach retirement age, the better!
Choose a Retirement Savings Plan
When you’re considering creating retirement accounts, you have a wide variety to choose from. If possible, open a 401(k) with your employer in which they match your contributions.
Those who don’t have access to such a plan should consider an IRA (individual retirement account). There’s no such thing as starting too early. You can open a Roth IRA with bottofinancial.com as early as your teenage years!
The more time you give yourself to save, the better off you’ll be. And again, there’s nothing wrong with starting with a small amount of money and increasing the amount as your retirement age draws closer.
Enjoy Your Golden Years by Saving for Retirement
Everyone deserves to spend their golden years however they please. Whether you dream of seeing the world or simply enjoying time at home, you should be able to do it!
Retiring from your career can be frightening, but with a retirement savings plan, you’ll be able to cross that bridge without fear. You’ll be comfortable in the knowledge that you saved and prepared well, all that’s left will be to relax.
Interested in learning more about building financial health? Take a look at our blog!