Step One: Set Clear Goals Well Ahead Of Time
The first thing to do is to make a list of things you want to accomplish in regard to your retirement. Envision what you want your life at that time to look like, while keeping all goals practical and reasonably attainable.
Even if you are not wealthy, estate planning is a good idea. Retirement income streams don’t just automatically happen – you have to establish them. And leaving factors like where you will live, what you will eat, or what kind of recreational activities you will enjoy to chance is likely to leave you disappointed in the end.
Step Two: Get Your Finances Under Control
Once you have established some clear goals, the next thing to do is to get your current finances under control so you will be free to pursue those goals. Heavy debt, operating on a deficit from month to month, and living paycheck to paycheck will make it difficult to save and invest.
This may require some tough decisions. It may involve letting your kids pay for their own college education (with student loans to help), for example, eating out fewer times per month, or going on “staycations” instead of always longer-distance, more expensive trips.
Step Three: Provide For Your Healthcare Needs
As they say, if you don’t have your health you don’t have anything. Excessive healthcare costs are the number one cause of bankruptcy in the US today, and the elderly are particularly vulnerable in this regard.
Be sure you have good health insurance now and a plan for continuing to have it in the future. Schedule regular checkups with your primary care provider, improve the healthfulness of your diet, start a daily exercise routine, and take other steps to stay healthy and fit.
Step Four: Arrange For Retirement Income
Don’t count on SS benefits alone for retirement income because it is almost never enough. If at all possible, wait until full retirement age to start collecting benefits so you will get 100% (taking benefits early can reduce them to between 71% and 99%.)
If you have a pension plan with your employer, find out how much per month you can count on from that. Also consider starting a retirement investment account like a 401K or an FIA (fixed index annuity.) A professional retirement planning consultant can help you choose a portfolio that both meets your needs and fits your budget.
Additionally, decide on whether you want to work during retirement, and if so, how much and in what profession.
Step Five: Formulate A Retirement Years Budget
Once you have a good idea of what kind of income you can count on during retirement and what kind of lifestyle you will want to lead, you can begin to make a tentative retirement-years budget.
Even when you have this all calculated, remember that things can change and it’s only an estimate. Expect the unexpected and save money to deal with emergencies so they won’t deplete your retirement funds.
To learn more about preparing for retirement, talk to an agent at BD Financial Concepts today!