Retirement on your mind lately? Maybe you’re convinced you’ll win the lottery and your need to save for retirement will be solved instantly or maybe you’re counting on an inheritance or trust-fund money?
While winning the lottery or coming into a lump sum of money can be useful and certainly help build up your retirement savings, it’s also risky if this is your primary source of savings income. Having a solid savings plan in place puts your mind at ease and can help give you a clear picture of your future financial status.
Thankfully saving is our specialty! Here are our 5 retirement saving tips.
1. Start your retirement debt-free
Retirement is a huge accomplishment. It can also be a huge adjustment, especially if you have existing debt. Trying to pay off large amounts of pre-existing debts like high-interest credit cards, mortgages, or lines of credit can be difficult when living on a fixed income like your retirement savings. Before you reach the point in life when you’re around the corner from retirement, look at your debts, and see how much it will cost to pay everything off completely. Trying to add supplemental income to offset debts when you’re past your working years is much more difficult.
2. Budget for medical expenses
This may seem like a no-brainer but a lack of savings or understanding of potential costs could mean you’re overspending in this area. These costs can include medications, supplies, required procedures, or assisted living homes, some of which may not be covered by your insurance (if you’re lucky to have retired with benefits or have a personal plan).
3. Changing retirement investments into income
Retirement income is more than the money you’ve set aside. There are other sources of income available to you. Think about applying for government benefits, speaking with your insurance providers for better rates, downsizing your home, or meeting with a financial advisor. Starting up a small business or something they can do part-time is what a lot of people choose to do in the early years of retirement.
4. Update all your legal documents (wills, beneficiaries, etc.)
You never know what’s going to happen or when. Having all your affairs in order well before any health challenges or concerns surface is the best thing to avoid any unnecessary hold-ups. Consult your lawyer, notary, accounting planner, or someone who has experience in estate planning. Consider speaking with your doctors about advanced care planning – who will make decisions for you when or if you can’t?
5. Develop a realistic budget & educate yourself on finances
A budget isn’t just for retirement planning. Anyone that earns an income should know the importance of savings and creating a budget. A budget is great for helping you manage your finances and plan out where your money is going to be spent. You can set aside money for large purchases, a family vacation, retirement, or just for a rainy day. Not knowing where your money is going in pre-retirement can make it difficult to adjust to life on a fixed income.
Rather than living off credit cards to pay bills, educate yourself about money! Make smart decisions when it comes to your spending habits and invest in your future. Your financial wellness will only be as healthy as you make it!