You’ll need financial security throughout your life.
However, the need increases more when you retire, since you lose the steady source of income you had till then. You might have intended to take a long vacation or set up a new business after retiring from your job. You might have planned to enjoy your life, relax and indulge in your hobbies.
Having debts might spoil your plans for retirement. Setting aside a particular portion of money, for debt repayments as per your debt management plan, will reduce the cash flow that you’ll need to turn your plans into action. It is advisable to plan early for your retirement, so that you don’t have to leave any of your wishes unfulfilled. The following tips might just be helpful as you start planning for retirement.
Tips for retirement planning
Your requirements don’t reduce after retirement. Only you’ll have more free time for your family as well as for those desires, which you might have neglected this long. So, why not make efforts yourself to lead a comfortable life after retirement? Make use of the following tips, and start building up funds from now onwards for your life, post-retirement.
- Prepare a budget to save – A budget keeps track of your financial income and expenditure. It helps you to prioritize your requirements, so that you can reduce costs on the unnecessary expenses. Save from your daily expenses, in every way possible, for your future.
- Calculate how much you’ll need – Your funds will determine your standard of living after retirement. Have an estimate about how much money you’ll need for your future, and plan your finances accordingly
- Get ownership of your house – If you have a mortgage on your house, try to pay it off as soon as possible. Your home counts as a valuable asset, and will be a huge investment on your part as well. After you get rid of the mortgage on your home, you’ll be able to save money on the monthly mortgage payments. Besides, it will give you a huge emotional boost, when you become the title holder of your place of residence.
- Pay off your debts first – In the initial period, your debt payments might leave you with little money to save. But as your debts get eliminated gradually, you can save for your retirement. You’ll be able to invest the additional money, and get returns or benefits from your investments after you retire.
- Save with employer retirement plan – You can easily enroll into the retirement plan offered by your employer. Contribute as much as you can towards your employers 401(k) plan. You’ll be able to enjoy tax deferral on the accumulated amount.
- Diversify your investments – You can enjoy higher returns from your investments, if done wisely. Invest through mutual funds, stocks etc. to multiply your finances. However, don’t put all your eggs in one basket. Diversifying your investments will reduce the risk factor, and improve your chances of generating surplus revenue.
- Purchase an annuity policy – You can buy an annuity policy, which is a type of insurance product. It works just like a savings account, whereby you put in money every month for a stretch of time. It acts as a favorable retirement tool, as it generates interest over time. You’ll be able to enjoy the returns from your policy in the future, according to your agreed terms.
- Save with an IRA account – The Individual Retirement Accounts or the IRA accounts offer tax benefits. You can choose a traditional IRA or a Roth IRA, as your savings option for life after retirement.
The savings for your retirement should never be withdrawn for other purposes.
You’ll not only lose on the tax benefits and the accrued interest, but may also have to pay surrender charges and penalties. You can get advice from a financial counselor to know about your retirement options, and plan accordingly for the future.
Author’s Bio: Stewart Bradley is a contributory writer associated with the Debt Consolidation Care Community and has written several articles for various financial websites. Though he holds his expertise in the Debt industry and has made significant contribution through his various articles, he has interest in budgeting, mortgage, insurance, short term loans, bankruptcy, credit advice and more.