Retirement is a period when we are free from most societal obligations, and we can choose to live out our lives doing what we want.
It is also a precarious period that requires careful planning and adequate foresight. Whether you choose to work part-time, travel the world, or spend your days with your family, you want to have resources in place to adequately fund your desired retirement.
There is no general rule as to when you should start preparing for your retirement, though starting early can make a significant difference in how much you can accumulate.
Regardless of how close or how far your retirement date is, here are seven steps you can take to ensure a comfortable retirement.
Know Your Financial Status
Before you can begin making plans for your retirement, you need first to know your level of financial security.
Having an in-depth knowledge of your financial status will allow you to determine the feasibility of your envisioned retirement plan.
It provides a clear report that helps you know if you are on the right track, if you need to increase your savings and investments or if your retirement plan needs significant adjustments.
Write Down Your Financial Goals
It is one thing to know what you want your retirement to be like, and it is another thing to be fully prepared for it financially.
It is vital to write down what you want to have achieved by the time you retire. Your financial goals can include the amount of money that should be in your savings account, your monthly income, or what the value of your assets will be when you retire.
It is advisable to seek the help of a financial planner in Newcastle to assist you in formulating your retirement goals.
Not only will a financial planner help you to set achievable goals, but they will also get you on the right path to achieving them.
Plan for Unforeseen Expenses
Retiring from work does not necessarily mean that expenses, big and small, would stop coming up.
Not having a good plan in place for these expenses would significantly derail your retirement plan, regardless of how painstakingly detailed it is.
Getting insurance for your life, healthcare, and properties is an excellent way to prepare for these future expenses.
When shopping for an insurance plan, take the premium rate and terms and conditions for a payout into account.
Find Avenues for Saving
You should regularly set aside a certain percentage of your income as your retirement funds. The ideal amount is between 10% and 15%.
Many employers offer a contributions account where you can deposit a fraction of your salary, which they match with the same percentage.
If you have already been saving money, it is a good idea to increase the money you save as your retirement date draws nearer.
Take advantage of every savings scheme provided by the government, your employer, or financial institutions that would be of benefit to you.
Pay Off Your Debt
Debt repayments can eat away your retirement funds and hinder the fulfillment of your financial goals, thereby derailing your retirement plan.
If possible, strive to pay off all debts, especially your mortgage and credit card bills. Review your payment plan and try to complete your repayments before you go on retirement.
Having a clean sheet will enable you to plan adequately for your retirement and allow you to save more.
Draw Up A Budget
To put a significant amount into your savings, you might need to evaluate your expenses and cut costs where possible.
Draw up a budget detailing your monthly income, expenses – both necessities and non-necessities, bills, and taxes.
Look at your expenditure and try to figure out how you can reduce your expenses. Finetune your budget until you arrive at a conclusion where you get to cut costs, save money for your retirement, and still maintain an adequate state of living.
Invest Your Funds
While you can make do with setting money aside for your retirement, investing your funds can yield significant returns, which will further boost your portfolio.
Talk to a financial advisor about profitable investments with manageable risk levels before you start investing your money.
Without careful planning and informed strategies, you run a risk of losing some or all your funds. However, if done right, a couple of investment options in your portfolio can provide enough resources that will help cater to your retirement.