Hi, everyone! This week, I want to look to the future for a moment. Most of us are currently working hard in our careers, but it’s never too early to start your retirement plans. Investopedia mentions that retirement planning is actually a lifelong process — so the earlier you start, the safer and more secure your retirement will be. The planning mostly involves financial strategies regarding how you can save enough money to be safe and comfortable, but there are other factors to think about as well, such as making the most of your time.
In this article, we’ll discuss some tips you can follow to ensure that your successful career will lead to an equally successful (and happy) retirement. Let’s jump right in!
Know how much you should save
The amount of money needed to retire comfortably differs greatly from person to person. But one of the general guidelines you can follow is the 80% rule. This means that you’ll need around 80% of your usual income by retirement. For example, if you make $100,000 a year, then you’d need savings that would equal $80,000 per year for around 20 years for a total of $1.6 million at the point you retire. (By the way, I chose a $100,000/year salary for “easy math” purposes. You can obviously adjust the numbers to fit your specific income.) However, as my recent “How’s Your Post-Pandemic Financial Situation Looking?” article discusses, the pandemic might have caused you some financial challenges, since many people were laid off work, or were forced to take a second job to make ends meet. If so, then the best advice is to deal with the basics first, such as getting food on the table and paying any debts. And once you’ve managed to stabilize your current finances, then you can start saving for retirement again.
Have good health care insurance
No matter how healthy (or young) you are, make sure you have adequate health care insurance. It’s a simple fact that as we age, we become more vulnerable to illness and injury. It’s conceivable that all you’ll need is an annual wellness exam (fingers crossed for all of us), but it’s also possible that you may need regular medical consultations as well as medications during your retirement. With healthcare prices constantly increasing, what you’re saving may not be enough to cover all your medical needs. Having health care insurance relieves you of that financial burden. Medicare is an insurance plan to consider since it already provides coverage to millions of retirement-age Americans, but you’ll probably want to locate and add a supplemental plan, as well. For instance, as KelseyCare Advantage outlines, Advantage plans can be an excellent option, since they have a wider coverage range than traditional Medicare, covering Parts A, B, and D, as well as additional perks — such as eye, hearing, and dental care. This kind of supplemental plan can provide what you need (and deserve—after all, you’ve worked for it!) to remain healthy, active, and vital throughout your retirement years.
Consider a supplemental source of income
When you retire, unless you have a pension plan, you’re likely to lose your steady source of income. Depending upon your particular financial picture, you may want to consider finding new ways to earn a living, in order to provide a more comfortable financial cushion. For example, you might investigate earning an active income through part-time work or independent contractor freelancing in your field. These can be low-stress, minimal-obligation, pleasurable gigs, since they typically don’t require long-term commitments. You can also choose to build passive income streams. USA Today offers a few suggestions, such as dividend-paying stocks. Healthy and growing companies can offer a dependable (and sometimes even increasing) income—for instance, a $400,000 portfolio with an overall dividend yield of 3% can give you around $1,000 monthly. (Again, I used “easy math” numbers here, but you can plug in your own.)
Pre-think how you’ll spend your time
Preparing for retirement isn’t all about the money. There are also psychological adjustments involved, since you’ll be leaving a daily structure you’ve followed for years. For some people, retirement can cause a sense of loneliness, coupled with a loss of purpose. However, there are ways to anticipate these feelings—and to circumvent them ahead of time. To save yourself from feelings of loss and isolation, try turning your thoughts about “retirement” upside down. In other words, rather than pondering what you’ll be leaving, focus on what you’ll be gaining: free time! Yay! Contemplate what you want to accomplish—and now is a good time to start thinking about it, even if your retirement is many years away. If you don’t plan on earning an active income, you can consider learning a new skill or hobby. Master a new language. Volunteer at the local library or animal rescue facility. Become a soccer coach. Or simply spend more time with your families, friends, and loved ones. The list of options is virtually endless. Having a solid game plan before your retirement date rolls around can help you to navigate this next chapter of your life with comfort, confidence, and joy! That’s it for today. Please feel free to contact me with your suggestions for future articles, and as always, I send all my best wishes for your personal and professional success. See you in three weeks.