Are you prepared for retirement? Whether you’re getting closer to retirement age or earlier in your financial journey, there are a few basic things you can do to start getting on track. Check out our tips for getting retirement ready.
Save the right amount
Perhaps the most important thing you can do to ready yourself for retirement is put money into your retirement savings accounts. If you’re looking to retire with a healthy monthly income, it’s key to make contributions over time and save enough to support your lifestyle.
If you’re just starting out, you might not be able to save a lot of money each month, don’t worry—this amount can increase as your salary increases. As you get closer to retirement, you may want to put a larger portion of your income into retirement accounts.
Consider your health
Your health has the potential to greatly affect your quality of life in retirement. Most people retire with a vision of what they’d like to do: traveling to places they’ve never gotten the chance to visit, devoting time to hobbies and sports, or just relaxing with family. Health issues can make these plans more complicated. If you’ve never been the type to worry about your health, you might want to start by getting medical attention you’ve put off and make lifestyle changes that can improve your overall health.
Health can also affect your finances. With rising healthcare prices, you may need to budget for medical costs in retirement above what your health insurance covers. If you’re shopping for life insurance, most types, including many permanent life insurance policies like whole life insurance, health problems can affect your ability to receive coverage or impact the cost of your premiums.
Decide where you want to live
In choosing where you’ll retire, you’ll want to consider many factors, including your lifestyle, finances, health, and family. Are you a beach bum, golf nut, or ski bunny? Do you prefer a more conservative, budget-conscious approach, or are you planning to splash out on luxuries? Will you need to consider your mobility or the presence of specialized medical care? Live near children or grandchildren?
Whatever your choices, you’ll want to ensure that your budget matches your ambitions. Research the cost of living in the areas you’re considering. Think about expenses specific to your location—for example, are you retiring to a busy metropolis with good public transportation, or will you need a car? Is the cost of housing low, or will you need to allocate a large portion of your retirement income to housing expenses? Are taxes higher or lower than where you currently live? It’s important to account for these costs.
Make a budget
When you’re thinking about your retirement budget, you might be thinking of your future budget, not your current budget. Knowing how much you’ll need in retirement is important, but unnecessary expenses now could delay your retirement or reduce your quality of life when you retire.
Make a list of your monthly expenses. Include not only necessary expenses—like food, rent, mortgage, insurance premiums, and transportation—but also discretionary expenses, like eating out, taking vacations, or going to the spa. If you’re not satisfied with the amount you’re saving for retirement, see if there’s anything unnecessary you can cut out that won’t reduce your quality of life. It’s tough to balance enjoying your life with ensuring your financial future in retirement, but it’ll be worth it when you’re able to relax in your golden years without worrying about money.