It’s good to live in the moment, but it’s also essential to think about the future from time to time. And specifically, what your retirement years will look like, especially from a financial perspective. Once you’ve left the workforce for good, you’ll need money in the bank to not only meet your monthly expenses but also so you can enjoy your golden years.
Alas, retirement is one of those things that catches many people by surprise. According to one study, more than half of Americans are not on course to pay for their retirement comfortably. So don’t become part of that statistic yourself — take steps now to ensure you’re in sound financial health in your later years. In this post, we’ll run through some tried and tested tips that’ll help prepare you for retirement.
Start Right Now
Planning for your retirement is one of those things that’s very easy to put off until tomorrow. But tomorrow can quickly turn into next month, then next year, and at some point, you’ll realize that you’ve wasted a lot of time that you could have spent saving. It doesn’t matter at what stage of your career you’re at, or how many years away you are from retirement — getting started today is absolutely the best approach. It could mean simply opening a savings account if you’re still in your thirties, or it could mean speaking to a financial advisor if you’re nearing retirement. You won’t regret taking action — but you might regret it if you don’t take action.
Be Realistic About What You’ll Need
No two retirements are the same. One person might be happy staying at home and tending to their vegetable patch; others will have grand ambitions to sail the seven seas. You’ll need to ensure that you have money in the bank that’ll allow you to live out your preferred retirement, whatever that may be. It’s very easy to understate how much you’ll need, or figure you’ll make do regardless of how much you’ve saved — but the truth is that’s unlikely to be the case. You might be fine, but it’s also a risky approach; if you’ve saved the bare minimum and expect it to be OK, then you’ll be just one unexpected expense away from falling into difficulty. The better approach is to overstate how much you need. The goal, after all, is to be comfortable, not to simply just get by.
The biggest obstacle to people saving enough money for their retirement is their difficulty in saving money. And you can understand why: saving is difficult. If you’re one of those people who struggles to direct money to their savings account, then look at making it as easy as possible. In this digital age, there are dozens of tools you can use to build your savings account. For example, automated saving apps. With these, your savings account will grow without you having to do anything. Simply switch it on and forget about it — without a year or so, you’ll have a sizable pot, and the money will keep on growing from there.
Make Smart Investments
It’s good to have money in a savings account, but it’s better to put your money to work. After all, if you’re trying to maximize your retirement savings pot, then you should do everything that’ll allow it to grow as much as possible. And while savings accounts can offer some annual interest, the rates are often much lower than what you’d find elsewhere. So rather than keeping all of your money in a savings account, look at putting it in a place where it can grow even further: crypto self managed super funds or investing in the stock market are two of the most popular options available. It’s advisable to keep some of your retirement money in a savings account, however, just in case you need to access the money in an emergency situation.
Invest in Your Well-Being
From a future-you perspective, there are two good reasons why you should be investing in your physical well-being today. The first is that, if you’re in good physical condition, then you’ll have the capacity to enjoy all that retirement has to offer. Many people delay following their dreams until they’ve left the workforce, only to then discover that they’re not as physically able as they once were and that they’re not in a good position to take those trips. The other reason is that healthcare is expensive, and preserving your health today will mean fewer trips to the doctor’s later on. With healthcare costs expected to rise significantly in the next two decades, a single health-related incident could wipe out a lifetime of savings pretty quickly. As such, preserving your health is one of the best investments you can make.
Speak to an Advisor
If you’ve taken steps to plan for your retirement early, or you’re in a relatively straightforward position, then you may be able to manage your retirement funding on your own. But if you’ve left it late, have some decision to make, or just have multiple retirement options, then it’ll be worthwhile speaking to a financial advisor. You’ll pay for it, but it can be worth its weight in gold, provided you work with a reputable, trusted advisor. Remember that who you decide to work with will have a significant impact on your future well-being, so don’t leave it up to chance — ask your friends and family, read reviews, and have an initial consultation before bringing anyone on board.
Downsize Your Life
You’ll want to live well today, but remember that your current lifestyle will have an impact on your future lifestyle. If you’re spending too much today — and many people are — then that’ll mean less money in retirement, which will mean you’ll have to reduce your lifestyle. The better approach is to keep things a little more balanced. For instance, if you downsize your life today, you’ll be able to put more money in your retirement fund and you’ll be able to maintain some consistency once you leave the workforce; you’ll be able to live the same kind of lifestyle.
Be Mindful of Inflation
Don’t make the mistake of thinking that if you have $100,000 saved today, then you’ll have $100,000 to play with later down the line. You won’t. Well, you’ll have that amount of money to play with, but what you can get for it will not be the same. Inflation is a fact of life and you’ll have to deal with it when the time comes. The best way to inflation-proof your savings is to invest them in an area that outpaces inflation.
Add Another Income Stream
A second revenue stream can be a game-changer for your retirement. Provided your primary income can fund your existing lifestyle, you can use any money generated from your second income for your retirement. There are a million ways to build a second income. You might rent a room in your home (which can generate hundreds of dollars a month, plus give you some companionship) or start a side hustle business — there are plenty of ideas floating around the internet to get you started.
Thinking about your retirement isn’t the most fun way to spend your time, it’s true. But it is important, because while it can seem like a long way off, it’ll come eventually. And how well you’re able to enjoy your retirement will depend largely on what you do today. So don’t delay — take action, and go into the future with confidence.