You’re planning your retirement? Congrats!
By now you’re probably already dreaming about how you’ll spend your free time. Whether you plan on traveling or having more quality time with friends and family, it takes careful financial planning to make your dreams come true.
Studies show that in the United States, about 10,000 people reach retirement age every day. However, not everyone who qualifies for retirement is ready when the time comes.
For those who want to know how to set the right retirement goals, we can help! We’ve created a short, but complete, guide that can help you no matter what stage of your career you’re in.
Read on to find out everything you need to know to plan the perfect retirement.
Setting Retirement Goals
Setting retirement goals is a process that evolves. First, you’ll want to have a brainstorming session to think about what your ideal retirement would look like.
Here are a few questions that can help you figure out what you want:
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Do you want to travel during your retirement?
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At what age would you like to retire?
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what financial responsibilities will you have when you retire?
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Are you dealing with a lot of debt currently?
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Do you plan on moving when you retire?
As you get ready to start your financial journey, keep in mind how much time you have before retirement. Next, begin looking into the different retirement accounts that will help you raise money for your future.
Instead of simply saving, you need to invest your money to help it grow. That’s why it’s always a good idea to start planning for your retirement as soon as possible. Younger investors can afford to take higher risks than those who are approaching the retirement horizon.
Save Regularly
No matter how close or far you are away from retirement, you’ll want to practice saving regularly. We suggest you save a portion of every paycheck you receive.
Even if there’s not a lot of money from your paycheck you can put towards retirement, make sure you’re putting some amount, no matter how small. As you begin to make more money or cut costs out of your life, you can increase the amount you’re saving each paycheck.
Maximize 401(k) Match
Another way you can consistently save is by participating in your company’s 401(k) program. When companies offer to match at high amounts it’s always a good idea to max out your contributions.
Let’s say for instance that the company you’re working for offers to match fifty cents for every dollar you contribute to your 401(k), with a 5% maximum.
In this scenario, you would want to make the maximum contribution (5% of your salary), so you can receive a 50% return on your money. Not only will you be making money from the company matching, but you’ll also be growing your 401(k) investments over time.
Catch up on Retirement Savings
Are you in the later stages of your career? If you currently don’t have a retirement plan, and you’re getting closer to your retirement horizon, you have a bit of catching up to do.
Consider Downsizing
First, look to your home to see if you have any equity available. If you have equity in your home, you can use it to support your retirement in several ways.
For instance, if you have extra space in the house that you don’t need, start looking for a less expensive, smaller house you could move into. Even if you only profit $50,000 from selling your house, that’s $50,000 you can put directly into your retirement account.
Of course, if you’re not interested in moving out of your house, then don’t force yourself to make a move you’ll regret.
Reverse Mortgages
If you don’t want to sell your home, look into getting a reverse mortgage with your bank. Reverse mortgages are government-backed loans. These loans give older homeowners a chance to turn some of their home equity into cold hard cash.
When you get a reverse mortgage, the bank will make payments directly to you. However, you won’t have to treat the payments like a typical loan. Instead of having to pay back the debt, the balance will be repaid to the bank when the surviving borrower dies, you move out, or sell your home.
Planning for Long-Term Care
Do you know how much it would cost you if you needed long-term care? Here are a few questions to help you determine what you should budget for:
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Is there anyone in your life who would help care for you?
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What type of care would you want?
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Do you have expenses you could eliminate to offset the cost of long-term care?
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Where do you plan on living in retirement?
It’s always a good idea to play it safe and plan for the cost of long-term care during retirement. Long-term services include assisted living facilities, nursing homes, and in-home assistance.
If you don’t plan on needing long term care, you might be hesitant to try saving for it. However, setting retirement goals is all about playing it safe.
It’s better to save for the care and not need it, than the other way around. Government support, through programs like Medicare, and Medicaid, won’t be enough to provide you with the type of care you need.
Instead, you’ll need to start designating a portion of your retirement savings to be set aside for long-term care use. We suggest using a Roth IRA or accumulation annuities to help save for long-term care expenses. You can also look into finding specialized health insurance plans that provide coverage for long-term care costs.
Have Everything You Want
There you have it! Some of the best advice for setting retirement goals that will work for you. What step will you take today to start planning for your future?
We hope our article was able to teach you at least one new thing as you begin your journey. For more ways to get where you want to be in life, read through a few more of our articles today!