Many people instinctively recoil from retirement planning or just put it off until later, but the sooner you start, the better off you’ll be.
Building a solid nest egg is even more crucial in these uncertain times. There’s no guarantee that Social Security will have the necessary resources to provide for the massive wave of Americans about to hit retirement age.
An experienced financial advisor can help you select and maintain the right combination of investments that will ensure you can live the lifestyle you deserve.
To get the ball rolling, I’ve put together this list of surprisingly easy steps you can take right now to prepare for a relaxing and enjoyable future.
Get Ready for the Unexpected
Your situation and goals can change in the blink of an eye. A substantial number of workers are now considering retiring early, even if it means paring down to a more minimalist lifestyle.
Having an emergency fund and socking away whatever you can, when you can, is a necessity these days. Your financial planner is a valuable ally when it comes to finding saving options that have the highest ROI (return on investment).
Unfortunately, accidents happen and the “rainy day” you’ve been saving towards can occur at any time. Having adequate insurance policies in place will protect your loved ones and keep your family safe should you become incapacitated.
Ditch Your Debt
Car payments, credit cards, mortgages, student loans — the number of consumers who carry a massive debt load has skyrocketed in recent years.
When you’re on a fixed income, it’s next to impossible to pay these bills and get ahead. That’s why it’s smart to get debt-free as soon as you can. Freeing yourself from the burden of debt will slash your stress level and let you use your funds in much more enjoyable ways.
Take Advantage of Free Money
If your employer offers a 401(k) or another retirement plan, you can maximize your balance with a few smart moves, such as:
- Go above and beyond the default savings rate (typically 3%)
- Ensure you’re fully utilizing your company’s matching funds offer
- Stay with the organization until you’re fully vested (which could take up to 6 years)
- Diversify by adding a tax-advantaged Roth 401(k)
- Resist the temptation to withdraw early
- Rebalance your allocations yearly
- Consider increasing your contribution by 1% each time you get a raise
While it’s nice to “set it and forget it,” it pays to adapt and update your investment strategy so it stays aligned with your evolving focus. Working with a talented financial advisor can help you avoid emotional decisions and reap the greatest amount of benefits.
As soon as 2034, senior citizens will outnumber children in this country for the first time in history. There will be more demand for health care in a system that’s already overwhelmed.
In addition to Medicare and private insurance, you may want to consider incorporating a Health Savings Account (HSA) into your financial goals as a way to cover healthcare costs in a way that gives you a tax break.
Adopting a healthier lifestyle will not only hopefully help you save on medical bills but will also give you more energy and lower your stress levels. Moderate exercise, eating well, and drinking more water are all things that anyone can do to find success.
Simplify Your Life
Building a realistic budget for now and for your retirement years is another key step that will help your nest egg grow, but not everyone has a natural gift for managing money.
Thankfully, there are plenty of convenient smartphone apps with budgeting tools that really work. You’re sure to find one that works well for your particular preferences and capabilities.
Another approach to consider is following the “50/ 30/ 20 rule.” The idea is to allocate your after-tax income into these buckets:
- 50% for necessities
- 30% for wants
- 20% into savings
While this might seem challenging or even impossible at first, making adjustments in the way you look at your spending habits will have an immense impact on your bottom line. Cutting waste now means much more money available later when you need it.
Partner With a Professional
The number one way to prepare for your retirement is to work with an advisor that has a fiduciary relationship with you. Having an expert on your side that operates according to your best interests will ensure that you have every advantage when it comes to meeting your financial goals.
There’s no one-size-fits-all way to plan for your golden years, as each person is on their own journey. But committing to forward-thinking decisions now and building a solid saving strategy is always a beneficial idea.
If you’re not sure where to start, I can help. It’s not hard to get overwhelmed with questions about investing, saving, estate planning, and more. Reach out today to discuss creating your individualized financial plan.