Retirement is the time of your life when you can finally enjoy all your favorite activities and spend as much time as you want with your loved ones. But if you want to secure the same lifestyle and spending habits you had before leaving the workforce, you need an appropriate retirement savings plan.
With a proper strategy in place, it’s possible to secure a comfortable life once your working years are behind. So, how can you prepare yourself for a fun and secure future? Let’s dive into nine essential tips for building a stress-free retirement plan.
Start planning early
Don’t delay retirement planning. It may seem like retirement is a long way ahead, and perhaps it is, but the sooner you start the easier it will be to achieve your financial goals. Also, for most people, there are more opportunities to generate income earlier in life. Good personal finance management requires retirement planning from a young age. Understanding some of the most important aspects of retirement will help you enjoy the golden years to the fullest, so start planning now!
Define your post-retirement goals
To prepare for retirement properly, you need to start by determining your post-retirement goals in advance. For instance, you may want to cover your children’s education expenses and their wedding too, or you want to relocate later in life. Whatever your important goals after you leave the workforce may be, make sure to calculate them and allocate your savings towards reaching these goals.
Calculate your predictable retirement income
Start with estimating the income you expect to get from your employer pension schemes, Social Security, your retirement accounts, and your savings. This will provide you with an insight into your retirement assets so you can calculate whether they are sufficient to support your desired lifestyle. Bear in mind that according to the four percent rule, for your assets to last for a lifetime you can only spend around 4% of your savings each year.
Monthly contributions are non-negotiable
Transitioning into a more relaxing lifestyle and having the time to do all the things you enjoy doing will require consistency, so investing in your retirement accounts every month is a must. Bear in mind that you generate the highest income at the peak of your career. At that exact time you can save the most, so take advantage of your higher earnings and contribute as much as possible.
And if you have an opportunity, make an additional contribution to your retirement fund. For example, you might receive a bonus payment. In that case, don’t hesitate to make a contribution. It will take you one step closer to enjoying your golden years.
Hire a qualified estate planning attorney
A good retirement plan includes the last will and testament. But there is more to estate planning than drafting a will. You want to ensure that settling your affairs goes smoothly and of course, you want your loved ones and yourself to be protected.
Consider including a reading of will too, as it can help your loved ones and other beneficiaries understand the terms of the will and clarify any misunderstandings. This is one of the most challenging moments for every family member, so getting everyone on the same page can be invaluable. It’s a good idea to consult with trustworthy lawyers that are experienced in estate planning. They will navigate you and your family through the estate administration process.
Work on reducing your debt
If you are getting closer to retirement, work towards reducing your debt so you don’t end up dealing with a huge amount of it in your retirement. Financial experts agree it’s best to pay down high-interest-rate debt first, and then move on to debt repayment.
Think about additional income sources
If you want to ensure you can support your lifestyle post-retirement, you may want to consider an additional source of income. You can profit from your hobbies like photography or writing, just make sure it isn’t anything too stressful or strenuous. Or, you can leverage your skills to earn more money. For example, if you worked as a psychotherapist during your active years, you can conduct workshops or courses occasionally to make extra money on the side.
Consider investing in health insurance
Catering to your health care is important. As we age, our health may decline and we may require more medical interventions, examinations, and therapy. Medical bills can be a major burden for your retirement savings. With a good health insurance policy in place, you’ll be able to afford medical care. This way you can live a longer and healthier life.
Don’t sacrifice your happiness
Ideally, your financial plan will allow you to grow your retirement fund and support your short-term goals at the same time. The trick is to find a balance between those two, and that balance depends on where you are in your life right now.
For instance, if you are about to start a family, you need a plan that will enable you to have a rich family life and still save for retirement. Either way, a retirement plan shouldn’t leave you stressed out and make you sacrifice your freedom and happiness.