Retirement means different things to different people. But regardless of whether you want to spend your retirement playing at home with your grandchildren, traveling the world, or somewhere in between, you’ll need to plan ahead to make the most of your life after you retire.
Many people start planning for retirement early in life. Others may put it off a little longer. It goes without saying that, the earlier you start preparing, the more likely you’ll be to be able to enjoy the retirement of your dreams. However, even if your retirement is suddenly a little too close to comfort, there are things you can do to plan for that next stage.
Whether your retirement is still years away or just around the corner, these tips can help you plan to make the most of it.
Stop and think seriously about the things you want to do when you retire. Do you want to stay in the same house where you raised your children or would you like to downsize or relocate? Are you hoping to travel? Do you have hobbies or other interests that you want to pursue? Will you continue to work part time? Could any of your hobbies or other interests be a source of potential income?
Talking to a financial planner or using a retirement calculator can help you determine the expenses you can expect to face, any assets you could use for income, and how much money you will need to enjoy the retirement that you want.
Increase Your Savings
Any increase in your savings will help you to be better prepared for retirement. Take a look at your expenses and determine if there is anything you could cut out in order to increase your savings.
Could you lower your cell phone bill or cut back to a less expensive cable package? Do you eat out a couple of times a week? Simply eating out less each month could be a nice boost to your retirement savings account.
Cut Down Your Debt
Entering retirement with debt can cut down on the money you have available to meet expenses and to enjoy yourself. Take stock of your debt and make a plan to lower it or eliminate it all together.
Many people start by paying off higher interest loans and debts first and then moving on to the ones with lower interest rates. Others start by paying off smaller debts. This gives them a sense of accomplishment, which fuels their motivation to tackle the higher balances.
Decide When to Collect Social Security
Many people rely on income from Social Security to meet their expenses after retirement. However, delaying the time when you start collecting social security can greatly increase the benefits you receive.
You could retire at 62, but you would receive 25% to 30% less than if you waited until full retirement age. People who wait until age 70 to start collecting benefits receive the greatest amount.
Consider The Cost of Long-Term Care
About 25% of people now 65 years old will end up spending $50,000 or more out of pocket for long-term care expenses. It’s a good idea to have a plan for what you will do if the need for long-term care arises for you or your spouse.
If your retirement savings are substantial, you may feel comfortable running the risk that you’ll have to pay for long-term care yourself. Or if you have children, they may be able to contribute to your care – either physically or financially.
Many seniors decide to purchase long-term care insurance, which covers many of the costs of a nursing home, assisted living, or in-home care – none of which are covered by Medicare. Although premiums for this type of insurance are fairly high, a single year of nursing home care can easily surpass what you paid in premiums over the entire life of your policy.
If you decide that long-term care insurance is a good choice for you, don’t wait to find a policy. Premiums are much cheaper for people in their 50’s and early 60’s. They rise quickly after age 65.
Planning ahead for your retirement can help you to define and meet your goals so that you can spend the golden years the way you want to.
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