Retirement planning can seem very complicated without the help and advice from retirement specialists. And while it is always prudent to speak to someone who understands your needs, it is smart to write a list of how you wish to see your retirement go.
And what you can do now to make sure that it works out how you plan.
It doesn’t matter how much or little you have in terms of savings right now, but you should always remember that your retirement might last 25 years or more. Where possible, start trimming down the cost of your weekly shop, cancel some of those credit lines, start paying off debts, and check out autosaving too.
One of the most beneficial saving tactics is to max out your 401(k). Or an IRA (or equivalent8 in your country) as the tax advantages can be amazing. If you are with a company that matches contributions, then even better.
Credit cards, loans, cars… whatever it is, start making strides to pay it off. The interest rate on debts can chew through a severe amount of the cash you could be saving. So focus on reducing them, and then saving – if you need to.
Sit down and work out how much you are really going to need. Typically you are advised to aim for around 8% of your current income. However, it is better to look at what you currently spend a year and make that your minimum amount.
It is worth remembering that as you get older, there will be reductions in some utilities, travel, and healthcare costs.
Be sure to calculate your pension into your estimations too. You might be surprised how much difference it can make. But remember inflation.
Think about the type of life you will want to lead when working 9-5 is no longer a factor. After the first few months, often people get bored and want to travel or renovate their homes. If you make a list of the things you might do if you had more time and fewer commitments, you can begin to sculpt your later years.
But, if you do decide that travel is on the agenda, you’ll need to make sure you plump up those savings to accommodate your ideal lifestyle.
If you are holding on to dreams of retiring a millionaire and reading this when you’re 25 – it is totally possible. Even in the years after 25, it’s still possible with some slight adjustments.
Using intelligent investment software can tell you where to put your cash in order to make back more cash. No, investing isn’t for everyone, and you have to be prepared to lose money too. But robo-investment software can help you make smart choices, and keep you in your risk category.
“Retirement gives you the time literally to recreate yourself through a sport, game, or hobby that you always wanted to try or that you haven’t done in years.”
Steven D. Price, How to Survive Retirement