How to Set Yourself Up for a Secure Retirement. Retirement is one of life’s most sought after events. Many people dream of retiring early, though for many more it is being pushed back further in an attempt to ensure that the available funds will be enough to pay for it. Some even enter retirement only to have to return to work to have the income they need. To avoid that, it’s important to set yourself up for a secure retirement early on in life.
Save Enough Money
One of the easier ways to get yourself set up for retirement is to save money. Building up savings accounts can be a good place to start. There are different high return savings accounts you can look into that can help your money grow over time far beyond what a traditional savings account might do. This is a crucial move for younger people especially, since they will be in a better position to leverage compound interest to their advantage. Of course, it’s helpful to know how much you need to save. Having a benchmark to check your progress will help you stay on track and have enough in savings to live on in retirement.
Plan Your Social Security Strategy
Most people have been paying into Social Security throughout their working life with the idea being that the money they put in is being invested and will be available to them when they retire. This is often considered fixed income, and payments are typically dispersed on a monthly basis. How much you are paid will depend on a variety of factors. There are a lot of considerations to make when planning out your social security strategy, one of which is when you should start receiving Social Security payments. The laws can be complex. If you want to put yourself in the best position possible, you need to give yourself plenty of time to plan and prepare your strategy.
Plan Your Insurance Needs
The need for insurance doesn’t go away once you’ve retired. In fact, with the way health declines at the end of life, the need for health insurance in particular is usually heightened. Good health, dental, and vision insurance policies are essential tools that can be used to help you protect and prolong your quality of life. In addition to health insurance, it’s a good idea to look into long-term care insurance. Many seniors find themselves needing additional care and support beyond what they are able to provide themselves and what health insurance policies are willing to cover. This care is often expensive and can easily eat through fixed income. Long-term care insurance can help offset those costs, protecting your ability to receive the help and support you need.
Build Your Home Equity
Your home is a potential source income as well. Some people may find the option of a reverse mortgage beneficial to them. If you don’t intend to use a reverse mortgage, your home can still provide you with some profit in the event that you choose to downsize and sell the home. Either way, building your home’s equity will put you in the best position to make use of it. There are a variety of things you can do to build your equity. Home improvement projects can add value to the home. Many deck features in particular are sure to attract buyers. Kitchen and bathroom upgrades also tend to add value to homes. These projects can easily go beyond the budget though, so it’s important to carefully manage costs when using projects to build equity.
Create a Budget
Just because you aren’t working to bring in money anymore doesn’t mean that you should throw the budget out the window. If anything, budgeting becomes more important in retirement than ever before. Having a budget is an important tool that should be used to both help you save for retirement and make sure your living style doesn’t outpace your income. It may be helpful to sort your expenses into categories to determine the level of priority each should be given. Priority should be given to necessary expenses such as bills, insurance payments, food, and transportation. Figure out how much income you’ll be working with and make sure that it’s enough to cover all your necessary expenses and some fun things too.
Invest Wisely
A lot of people turn to investing as a way to build up financial resources for retirement. 401(k) plans, IRAs, and guaranteed income annuities operate on similar premises to Social Security. The money that is put into these accounts is invested and when the accounts come to term you’ll have money available to you when you retire. It’s also possible to personally invest in the stock market. If you’re going to do that, consider the level of risk you want your portfolio to have and how diversified you want it to be.
Live Below Your Means
If you want to protect your income both before and during retirement, it’s best to live below your means so that your income outpaces your spending. This way of living is the only way to live in order to build up savings and have money available to put into different retirement accounts and investment opportunities. If you aren’t currently living this way, adjusting to doing so can be difficult. Start small and gradually work your way into it.
Get Financial Advice from a Professional
Getting yourself set up for a secure retirement can seem overwhelming when facing it on your own. Fortunately, there are a variety of professionals who can help you sort it all out. It’s their job to know the ins and outs of their niche in the financial world, from Social Security to personal investments. If you aren’t sure what to do yourself, getting advice and direction from a professional might be one of the biggest favors you can do for yourself when getting set up for retirement.
It takes a lot of work and careful planning to set yourself up for a secure retirement. The sooner you start planning for it, the better. Setting yourself up well means taking care of and managing a variety of financial resources. Make sure you do your research so you know what moves to make and when to make them. Consult a retirement professional for any extra help you need.
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Additional Resources: Your Post Retirement Options – Your 2021 Guide
