5 Important Tips on Planning for Retirement

5 Important Tips on Planning for Retirement

If you are in your thirties or forties, retirement planning isn’t something you would want to think about. You probably think of it as something that will come in the far-away future.

But future planning is necessary for managing finances, because before you know it, that far away future is here already.

If you don’t want to worry about your finances during retirement and maybe even retire early, read on for some tips to do so.

  1. Contribute the Maximum to Your Retirement Savings

It’s easy to put retirement savings at the bottom of the pile when paying bills and thinking about present-day expenses. You already have so much to worry about right now. Who has the time to think about future planning?

But try to make retirement savings a priority rather than an afterthought. Your future self is broke right now and he/she needs you to take care of them. They can’t do it alone.

  1. Think About Your Health Insurance Strategy

Plan for some major healthcare expenses in retirement. You might not want to consider it, but as you get older, you are going to need even more money to maintain your health.

Ensure that you apply for Medicare in the months before you start approaching 65, so the coverage has time to kick in.

  1. Stop Lifestyle Creep

Lifestyle creep is a term that is used to describe the change that happens as discretionary income rises, and former luxuries now become necessities. Do not let that happen to you.

As your income rises, think about sticking to your former spending. This way, you will be well prepared for retirement spending, when it does come.

  1. Think About Part-Time Work during Retirement

If you are not the kind of person who can sit on a beach for the rest of your life sipping mojitos and gossiping about the neighbors, then think about what kind of part-time work you could do during retirement.

This way, you will keep your brain fresh, and you will prevent yourself from becoming stale and bored during your retirement years.

  1. Follow the 4% Rule for Retirement Spending

The general guidelines for retirement spending say that you can safely spend 4% of your retirement savings in the first year of your retirement.

If you follow this simple formula, your retirement savings should last at least 30 years. For example, if you have $1 million saved up, you can spend $40,000 in your first year of retirement.

In year 2, you would adjust this amount for inflation. So if the inflation rate is 2%, you can withdraw $40,000 times 1.02 which is $40,800.

Future Planning Is Key When It Comes to a Healthy Retirement

Without proper future planning, you will not be able to have a retirement that’s filled with all of the different activities, travel, and lifestyle that you wish to have.

Don’t delay. Start planning for your retirement now, no matter what age bracket you fall in. The earlier you start, the easier your retirement planning and financial management will be.

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