As schools cautiously open and some people start to go back to work, others who were only a few years away from retirement have decided to retire early in order to continue social distancing. With several unplanned retirements suddenly becoming reality, it’s important to make sure you have considered several elements of planning for retirement before you take the plunge.
1. Save Money Wherever You Can
One of the best financial strategies to planning for retirement is to start saving young. As soon as you get your first job in your career field, you should be putting money away for when you retire. There are a variety of retirement accounts available either through your employer or independently, including a 401K, 403B, IRA, and Roth IRA. Some employers have a matching program where they will contribute a certain percentage of what you put into your retirement account. Make sure to do your research on which retirement savings account makes the most sense for you.
2. Create a Budget
Just like life before retirement, you need to create a budget so you know how much money you will be spending and, therefore, how much money you need. This is even more important when you are retired as you may have no or limited income. Your retirement savings will last you much longer if you plan out how much you will be spending each year (and, subsequently, each month). Take into consideration pension, stocks, and other forms of income you may still be receiving, as well as your typical bills. You may find you have to cut down on certain areas of your life, like giving up a second car or going out to eat less.
3. Consider How You Will Pay For Healthcare
As you get older, your healthcare needs may become more prominent. However, once you retire, you will no longer receive health insurance through your job. That means you need to figure out both where you will find a coverage plan and how you will pay for it. If you are older than 65, you are eligible for Medicare. Medicare doesn’t cover everything, but it covers a lot. If you are younger than 65, you will need to find health coverage elsewhere. The Affordable Care Act plan has some healthcare plans at subsidized rates, which may work for you. Or you may want to wait until you are 65 in order to retire.
4. Pay Off Your Debt
Your mortgage, car payments, and other loans are extra burdens when you have a steady income, let alone when you don’t. You definitely want to avoid retiring with debts you still have to pay off, as they will become extra burdensome when you have less money to use to pay them off with. Even if it means prolonging the time until you can retire, it is wise to wait until these debts are paid off and you can use your money for smaller bills.
5. Meet With a Financial Planner
A financial planner will help you create a retirement plan and put together a retirement portfolio with you so you can have a clear idea of when is the best time for you to retire and how you will manage your money during that time. The cost of living only grows as time goes on and life expectancy is longer, so you want to make sure you have plans in place to both spend your money wisely and continue to bring in money passively through investment accounts or other means.
At DeSantis, Kiefer, Shall, & Sarcone, we can help you with planning for retirement so you can enjoy the retired life and feel financially comfortable while doing so. Even if you start saving later than you would have liked, we can help you manage your money smartly so you can help it grow in the best ways possible. Retirement does not have to put you in a place of financial stress. Proper planning will ensure you can afford to live life to the fullest while you are retired.