It’s difficult to think of retirement when you’re just at an early stage of your career or even mid-career, but ideally, you should start preparing for retirement as early as in your 20s. Even if money did actually grow on trees, it would take some time to grow, so the sooner you start building a nest egg, the longer the time your money will have to grow.
So, take a look at what you can do to start getting ready.
Start saving early
Let’s say you start saving at the age of 25, putting a yearly $3,000 aside in a tax-deferred retirement account. You do this for 10 years in a row and stop saving at 35. When you reach 65, that $3,000 would have grown to $338,000. Or let’s say you start saving the same amount when you’re 35 years old. When you reach 65, the amount will have grown to $303,000.
Determine retirement needs
You need to make a realistic list of what your post-retirement needs will be and come up with a monthly budget. The problem with retirement is that we often describe it as the time to do what we want, like travel and the likes. Many retirement activities can be expensive, and you’re no longer making the same amount of money you used to. A general rule of thumb is that you’ll need 70% of your pre-retirement salary to live comfortably. That can be true assuming you have no mortgage to pay and are in very good health.
People are now living longer and this has to be taken into account when determining what your needs might include. Unfortunately, pensions and social security might not be enough, and you will need to use pre-retirement savings.
You need a steady cash flow during your retirement period to feel secure and there are different ways to guarantee that. Some people might decide to take on a part-time job, while they’re still in work mode. Others might find ways to invest their money, such as in real estate funds. That’s not a bad investment since they’re not always affected when markets are in decline; in other words, these funds aren’t tied to the stock market, which means less risk.
Investing in gold is another way to go. It’s been used as a currency for thousands of years and it’s an investment you can consider putting in your portfolio. When you read more about Gold, you will come to understand that it is used to hedge against inflation, and by buying gold, a person is protecting a certain percentage of their funds from potentially harmful inflation. It can easily be turned into liquidity, and even when the price of gold changes, its value doesn’t change that much. You want an investment that poses little risk, and gold is one such investment. There’s no one strategy that is absolutely the best, so you will want to look into different options.
The main thing most people will want to take care of is their health as they enter retirement. They also want to make sure they have a healthcare plan in place. Without it, all that saving you would have done over the decades can go in a flash if you have to go through essential and expensive medical care. There are plenty of insurance options and other types of plans that will cover your needs. Some plans will cover the basics, while others will cover more.
For an average, healthy, 65-year-old male, the estimated total premiums and costs from your pocket would be about $4,500 a year. That means if you haven’t put aside a budget of around $375 a month for healthcare costs, you won’t have enough cash. And this isn’t even taking into consideration the rising costs of healthcare.
To counter health issues and save money, one way to spend a good part of your retirement time is to remain healthy by exercising and eating right. As they say, prevention is better than cure. You want to not only avoid the burden of medical bills but also simply stay healthy to enjoy retirement.
There’s a lot more to be said about preparing for retirement. There are many avenues you’ll want to look into concerning your wealth and health. It is a new phase in your life that needs groundwork to be laid. Perhaps the only boring thing in retirement is the preparation, but it will ensure a fun, fulfilling, and active lifestyle afterwards. When you’re well-prepared, nothing will catch you off-guard and you can put your mind at ease and relax.