Every hardworking person has retirement in mind. You work so hard in your youth with the hope that your later days will be as comfortable as your present or even better.
Over the years, the retirement age has changed. Legally, the average retirement age in most countries is still between 60 and 65 years, but that has not stopped people from retiring at 50 or below. Of course, waiting until you hit the set retirement age in your State gets you 100% of your Social Security benefits and Medicare. The downside is that you spend more time working and less enjoying your retirement.
How Do You Ideally Plan Your Retirement?
Retirement planning needs a lot of thought as you do not want to get off work before you have set aside enough money to sustain your livelihood. Considering that you will no longer have your current annual income, you will need to start planning early enough.
Youth is wasted on the young, and so is money. Tell a 25 year only today that they need to start planning for their retirement and you will be met with an ‘are you insane?’ look. When it comes to retirement planning, no one is too young to start. Actually, if you are over 25, then you made it to the other side. Open a 401k account and start setting aside some income to supplement your Social Security.
One other benefit of 401kk is that your employer kicks in some amount and so your monthly total will be higher. You can also count on compounded interest and tax deferral that will have made a vast difference by the time you are 40.
How Much Do You Need For Retirement?
It is not so surprising that half of the American working force does not know how much they need for retirement. Matter of fact, research by the National Institute on Retirement Security found that your average working household has virtually no retirement savings. The findings were primarily based on 401k account balances and total retirement assets of the participants.
Without knowledge of how much you need to retire, you will not have a basis for saving. The rule of thumb is that you will need 80% of your current annual income during retirement. However, the better thing would be to use a retirement calculator to figure how much you would need to set aside per month. These calculators take into account your preferred retirement age, your actual assets, the accumulated amount in your 401k and IRA’s account, the equity you are going to draw from your home, and the amount that is going to come from social security. Taxes are usually not included. And so your actual income will be less. With this knowledge, you can set a per-month target and start working towards it.
Step Up The Care Package
We all know that age brings disease and general weakness of the body. Unless you are Ernestine Shepherd, your body will need more money for healthcare than it will for food. It would be wise to revamp the healthcare kitty so that you are catered for even when you exhaust the State-covered medical benefit. In the event that you will need personal care (which most people do after 90), your family will not struggle to raise funds.
Whatever you do, do not touch your retirement kitty. Not even on a rainy day. Also, take note of the changing inflation rates and update your retirement planning accordingly.
How To Sustain Your Retirement
The first years of retirement are going to be spent making up for all the hours of hard work. Retirees are stocked at the idea of having time on their hands that they spend most of it traveling, meeting other retirees, and eating out. Certainly, you will spend much of your money at this stage, which is allowed since you have the energy for it, but you should be keen not to overdo it.
Do not be tempted to spend more that you had planned. If you can, take some time to decide how much you will spend during the first, say, five years. Plan your trips well in advance so that you can benefit from early-bird bids, and choose your accommodation wisely.
Sweat The Small Stuff
The economy will not remain the same, and so it is ideal that you factor in inflation and taxes even as you inch closer to retirement. As you spend, think the 4% rule. You do not want to outlive your retirement kitty, and as such, it helps to be conscious of each withdrawal that you make against your portfolio. You should have your financier work out a withdrawal limit to minimize chances of spending more that your plan can sustain.
You Have Done The Work! Now Enjoy Your Retirement
You have done well and saved for the eventualities, and now it is time to live your retired life. Since you have put a good amount aside, and you aware of how much you should spend per year to live the rest of your time comfortably, you can now kick back and enjoy a little.
Travel World Over
If you have always wished to travel, but you haven’t had the time from your busy schedule, you can now explore the world. I would not mind gazing at the stars in the sandy beaches of Jamaica by night and kite surfing during the day if my health allowed it. A cruise to the Caribbean would not only be good for your health, but also for your pocket with all the duty-free shopping. Surprisingly, these Caribbean cruises are not too out of reach. A 2-night Caribbean cruise departing from Fort Lauderdale, Florida, could cost the two of you about $600!
An active body harbors an active mind and keeps diseases at bay. At this point in your life, joining a club not only benefits your body, but it also helps you meet other people to revamp your social life.
Mentor the Younglings
They could benefit from doing the things you did in your youth to get you the life you have at retirement. When you meet them at the health club, you could help them get started on retirement planning.