Has the concept of retirement been extinguished?
Over the years, studies have revealed that most Americans do not anticipate to retire and think they will die working. This may be a bleak way to look at the future, but it is also a realistic one for many people.
But the retirement dream does not have to be a fantasy. With careful planning, a dedicated saving ritual, and a list of retirement goals, you might not have to spend your winter years at the office. Instead, you can enjoy your golden years under the sun at the beach – or curled up on the sofa!
We have put together a list of the best retirement plan tips to ensure your old age is not wasted.
1. Determine Your Retirement Type
If you had the chance to retire today, what would it look like?
For many, the idea of traveling the world is a dream. For others, taking it easy at home is just as enticing. Your dream retirement may be a combination of both.
Whatever the case, it is vital to determine your retirement type in order to develop a retirement plan with your financial advisor. This will determine how aggressively you’ll need to grow your savings.
2. Plan for Inflation
Unfortunately, price inflation is not going away. After 2020 was laden with trillions of dollars in fiscal and monetary stimulus and relief, the astronomical amount of money pumped into the economy will trigger a significant bout of inflation. Consumers already see it, whether at the grocery store or in the real estate market – life is about to get expensive.
A critical component of any retirement plan is to plan for inflation, but how do you achieve this?
- Select investments that rise with inflation and pay a monthly or quarterly dividend.
- Create a budget for retirement.
- Come up with retirement phases.
- If you haven’t already, buy life insurance.
- Transition to an account that earns you investment returns, such as an all-in-one checking and investing account like Finch.
3. Stay Healthy
Health care costs play a crucial role in your finances during your retirement. That is unless you are healthy. By being healthy today, you can improve your chances of maintaining your health as you age, allowing you to pocket the savings from not having to spend money on prescriptions, hospital visits, or even surgeries.
4. Monitor Your Investments
Sure, you can take the “set it and forget it” approach to investing as long as you have an automatic savings plan (ASP) and you are a long-term investor. This may be wise in your early years, but as you approach your retirement days, it is imperative to closely monitor your investments and see how they are performing, particularly if you’re thinking of selling these investments to fund your retirement. Consider your timing, and ensure that you’re selling while the investment is strong.
5. Maintain a Good Credit Score
As you hone in on your retirement days, the primary aim should be to be debt-free. You do not want to use your finite resources on servicing your debt. This is the pinnacle of fiscal responsibility!
That said, you should still desire to have a great credit score heading into your winter years. This should be out of precaution if you want to apply for a big-ticket loan – such as a reverse mortgage or a line of credit – to cover unforeseen expenses or if you have exhausted your funds.
Essentially, a good credit score gives you greater negotiating power and opens the doors for you to attain better borrowing terms.
6. Boost Your Retirement Savings
It is easier said than done, but boosting your retirement savings is paramount if you wish to take it easy in the late stage of your life. This can be difficult if you are having trouble making ends meet during your working years. However, no matter your circumstances, it is crucial to accelerate your retirement savings as you start approaching your retirement.
But how? Here are some tips you can consider adopting either now or as you get closer to retirement:
- Meet your employer’s match.
- Contribute to your 401(k).
- Utilize catch-up contributors if you are 50 or older.
- Take on a second part-time job to add to your savings.
- Downsize your lifestyle, such as moving to a cheaper city or slashing your budget.
- Allow your adult kids to stay home but pay some of the rent.
- Increase your monthly ASP contributions.
Are we living through a retirement crisis today? Some financial experts say that we are close.
Social Security benefits exceeded the program’s costs in 2020, and $2.9 trillion in reserves will be exhausted by 2035. Plus, Social Security is not enough to sustain retirement, meaning that workers need to work hard to ensure they are financially secure once they hit their 60s, 70s, and 80s. Is it easy? Of course not! Is it doable? Yes.
With some sacrifice, hard work, and planning, you can achieve your dream retirement – whatever that may look like.
