Everyone has certain plans and dreams for the lifestyle you want to lead once you retire. Whether yours take you to a tropical beach where you sip umbrella drinks all day or involve cozying up in front of a warm fire and getting to work on the great American novel, the financial decisions you make today impact how effectively you’ll be able to accomplish those goals.
Without the right retirement strategy, the closest you might get to the beach in your retirement is a screensaver on your computer. But, how can you tell if you’re on track to achieve the retirement of your dreams? These are a few signs that you’re on track to live the retirement lifestyle you desire.
Are You Living within Your Means Today?
This means you’re not spending more than you earn. You’re able to save a little money each month. And, you’re paying down your debt, so you’ll actually owe less each month when you retire. You especially want to have little, if any credit card debt and would ideally have paid off all student loans, home loans, auto loans, etc. before you reach the age at which you plan to retire. This will mean your expenses will be limited to taxes, maintenance, entertainment, lifestyle, etc.
One mistake many people make as they approach retirement is purchasing a new home. That’s wonderful if you’re selling your existing home and purchasing a newer, smaller home without taking out a loan on the newer home or purchasing a home in a maintenance-free community that helps you limit home-related expenses throughout your retirement.
Are You Maximizing Your Retirement Contributions?
What this means, are you investing as much as is allowable to your 401(k) plan, IRAs, etc.? You at least want to contribute as much as your employer will match when it comes to your 401(k) plan. Ideally, you’ll contributed the maximum each year to all your retirement investments and then add additional contributions once you reach the age of 50 and are able to add “catch up” contributions into the mix.
Don’t forget outside the box investments as well, like real estate, annuities, stocks, bonds, etc.
Do You Know How Much You Need to Live During Retirement?
Have you considered working with retirement investment calculators that give you a “big picture” idea of the amount you need to have saved to generate a sufficient retirement income? The great thing about an effective retirement calculator is that it takes things like anticipated lifestyle, location, etc. into account to help you create a realistic starting number of your retirement savings efforts, so you can plan your investments accordingly.
Do You Have Savings to Supplement Your Retirement Income?
Saving and investing for retirement is one thing. Personal savings are something else. Have you developed a lifelong habit of squirreling away money for rainy days? If so, that habit, and the money you’ve saved can help you throughout your retirement. If you’re good at living a modest life and content to do so throughout your retirement, you’ll be more on track than someone who is prone to spending more money to fill “empty” hours in the day.
Some people aren’t content to sit at home and watch television. You need to be active and on-the-move to be happy. There’s nothing wrong with that. Retirement, though, presents you with well over 2,000 hours per year, on the conservative side, that were once occupied with work. How do you plan to spend those hours once retired? Supplemental savings can help you find things to do to fill up those hours like a new hobby, starting your own small business, or something else.
How Long Before You Plan to Retire?
The closer you are to the age at which you want to retire, the more important your retirement savings and investments become. The general rule of thumb is to take bigger risks when you’re younger and make more conservative retirement investments as you age. Some people become more conservative at the age of 30, while others wait until the age of 40 to begin reigning risks in. The key is to maximize contributions as you approach retirement age while reducing risks.
If you’re not working with a retirement financial planner, we encourage you to attend one of our free educational workshops to learn more about your options for retirement planning and investments. We can help you determine how close you are to your retirement goals and what you can do to get there faster.
Licensed Insurance Professional. Provides general information about insurance and retirement-related products and services. These products and services may not be specific to a particular state. Information provided on this website, in seminars or through printed or other published materials are not intended as specific legal, accounting or investment advice to an individual’s particular situation. By providing your information to us, you agree that we may contact you regarding the potential sale of annuity and/or insurance products. Information provided by Licensed Insurance Professional does not necessarily represent that of the individual professionals presenting this information. All the information presented is believed to be accurate and is secured from reliable resources, however, no guarantee is made to the completeness or accuracy of the information presented. Any opinions expressed are those of the author and the material presented is for educational and informational purposes only and is not intended as legal, investment or tax-related advice.
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