If your retirement is approaching, you may want to start reviewing some practical matters like your finances, savings and considerations about where to stay etc for your golden years. After all, retirement is an important milestone and a big transition, hence it is vital to be well prepared to enjoy the greatest level of comfort and happiness. This article walk you through how to plan for retirement so you’re ready to kick off your golden years!
Review Your Finances
Your savings and finances have to last you through the remaining years. As such, it is good to take stock of your savings and retirement income or funds from annuity. Be mindful of how they can cover your monthly expenses like groceries, fuel and gas, toiletries, shopping, etc. More importantly, consider if you have extra savings or income to cover any unexpected healthcare costs that may fall out of your insurance coverage. Using retirement calculators and social security calculators can help you to determine the standard of living that you can enjoy or if you can even take an early retirement.
Ideally, your average retirement income will need to be about 70% of your current income. For most people, this income is earned from accrued savings and Social Security payments. Social Security payments are determined by your 35 highest earning years, but you can’t start receiving these benefits until age 62. If you delay receiving Social Security until age 67, however, you can receive 8% more in benefits up to age 70. To get an idea of where you stand with these benefits, sign up for a free Social Security report.
Subtract Debt from Personal Net Worth
Create a list with all liabilities, such as mortgages, auto loans, student loans, personal loans, and credit card debt. Paying off debt is one of the most important steps before retirement because your savings and retirement income will last much longer if you don’t have to make monthly payments toward your debt, which accures interest rates with time. Calculate your personal net worth by making a list of all assets, including cash, real estate, vehicles, personal property, bonds, stocks, and investments. Keeping track of your capital will help you plan around your income sources during retirement, and let you have an idea of how your budget may look like month to month.
Cushion Yourself Financially
While a healthy retirement account is important, don’t forget to build up an emergency fund to cover rainy day expenses. This savings account should have at least six months worth of income that can cover housing, insurance, and other costs in case of an emergency or delays in your pension. In addition, continue to make contributions to your retirement account. In addition to the yearly contribution, you can also consider adding voluntary contributions to boost your social security payouts.
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