Have you ever daydreamed about retirement while sitting at your desk, enduring a dull day at work? Maybe we all have because it seems like the ultimate happy ending to our tragic and exhausting work life. Imagine yourself lying on the beach, sipping a cup of fresh orange juice. Oh, the pure joy of never having to submit a mind-numbing presentation. It is all that gets you going in your career life: a happening and enjoyable retirement!
But wait! Even though it all seems so delectable to imagine, the question you need to ask yourself here is, ‘How will I manage my retirement planning?’ You retire when you stop working, and when that happens, you get no inflow of money. So how do you plan to pay for your delightful trips to the beach? Are quick move in homes right for me? Should I snowbird? These questions and more are why retirement planning is crucial!
Retirement planning involves a few steps. These steps aim to make you a financially independent individual even when you do not have a permanent job. The objective of retirement planning is to let you have all the fun while having enough resources to experience a financially secure retirement.
So, without further ado, let us jump right into the steps you need to take to devise an ace retirement plan.
- Define Your Retirement Goals:
A plan without a goal is, well, unworkable. If you do not know where you want to end up, you can never choose a trodden path. Therefore, you must define your retirement goals first thing in your retirement plan.
Now, what do we mean by retirement goals? Each person is different, so every individual’s idea of a relaxing and secure retirement is also different. Maybe for you, traveling worldwide, meeting new people, and experiencing a more meaningful life is the perfect retirement living goal.
On the other hand, however, your best friend may wish to purchase a tiny cottage right outside the city and live a peaceful, mellow life. Once you define your goals, you will realize how significant they are in determining your retirement plan. Whatever you plan to do would require finances, and thus, it is critical to know what you want to save for and plan accordingly. Some retirees still have aging parents or partners with medical concerns that they need to care for as well and this should be considered in case there are costs are associated. For instance, those with aging parents may be worried about getting them the right care for their needs. Are you looking for companion care in Tucson? or in your immediate location? Maybe you want full-time in-home care. If so, you will need to go through the right steps to put this in place, not only for their peace of mind but yours too.
- Evaluate Your Current Savings:
Now that you know where you have to reach, the next step is to judge your starting point. It is the amount of money you currently have as retirement savings. Assessing your current situation will help you know where you stand. You will learn if you ready for your retirement and how much work you need to do further. It will also help you cater to any shortfalls you already have in terms of time wasted without an adequate savings plan.
Calculate the balances you have in accounts for the retirement plan. Also, do not forget to add money saved in workplace retirement plans. To have a better picture of your cash position, deduct any amounts you have saved up for emergencies or any one-off retirement expenses such as buying a house.
- Review Your Income Sources:
You know your destination, and you also know how much you need to run to reach that endpoint. All you need now is a running gear! Excuse the example; by running gears, we mean some stable income sources to finance your retirement goals.
The primary source of your income during retirement should come from your current savings from your monthly source of income. Whatever you save today, you will get to use it during your retirement. However, this is not the only option. Often workplaces offer pension plans. These pension plans produce money that is later used by employees during their retirement period. In addition to this, you should also factor in any part-time jobs you can take up to sustain yourself and your retirement dreams.
The state also provides social security benefits to retired individuals. These benefits are given based on the criteria that the government follows. If you are about to retire and have zero savings, you can also claim social security benefits.
- Invest Your Money:
You wish to travel the world and live a great retirement life but do not have enough savings to allow you. So, what do you do now? One way to increase your savings is to invest them! The thumb rule for investing your retirement savings is this: the nearer you are to your retiring age, the less risky saving portfolio you create! It is because investments are hit-or-miss, and when you have less time, you instead do not take the risk of blowing up your savings. So the older you get, the more you should stick to investing in bonds rather than company shares.
Moreover, you can also consider seeking advice from stockbrokers or investors. Such professionals can guide you on devising an appropriate investment portfolio that does not pose many risks to your savings.
Retirement planning is imperative if you have huge plans for that phase. If you fail to plan, you will find yourself in an unexpected situation grasping some security and stability once you retire. For now, retirement may seem blissful. But once you step into it, the harrowing idea of not having work or not owning enough financial independence can push you through despair quite easily. It is why we advise you to adopt these simple retirement planning steps and make your retirement phase enjoyable and fun.