At the beginning of each New Year, individuals commonly take stock of various aspects of their lives. One of the frequently reviewed primary areas is personal finance. If you are thinking about retiring within the next few years or longer, you may want to create a resolution or two so that you can better plan for your non-working years. However, some people believe that it is simply too late for any type of plan to be effective or beneficial. While it is better to start preparing for non-working years early in your adult years, starting now is better than not making any preparations. These are some of the areas that you can resolve to address shortly.
Set Retirement Goals
Everyone has some dream about what their life may be like after they stopped working in a full-time position. For some, the goal is to continue working on a part-time basis. Others want to travel, and some may just want to be closer to family. A primary resolution should be to define your goals. Without specific goals, it is not possible to properly plan for the future. After all, maintaining your lifestyle if you travel frequently may be much more expensive than being closer to home.
Another resolution should involve eliminating debt. Debt cannot usually be paid off quickly, so resolve to create a feasible debt reduction plan. When you pay debts off now, you can reduce the amount of income you need after you retire. For example, if you pay off your mortgage, car loans and credit card balances, you may be able to live on several thousand dollars less each month. By reducing the income that is required to live comfortably, you can feasibly retire with less money saved up.
Prepare a Budget for Retirement
In addition to making a plan to eliminate debt from your life over the next few months or years, you also need to prepare a budget for your non-working years. This budget will include estimated income from all sources after you quit working. It also will include reasonable estimates for expenses. Your planning should focus on cost-of-living adjustments related to inflation. If you plan to relocate to a new town after you retire, your budget should be realistic for that specific area.
Update Insurance Coverage
Many people who are preparing for the future fail to consider changing insurance needs after leaving the workforce. As you get closer to retiring, determine if you will continue to need life insurance. Analyze your needs for different types of medical insurance and long-term care insurance. Each retiree is in a different position, so there is no catch-all rule regarding how much or what types of insurance you need to have. Remember to update your budget with the premiums for these various insurance products. It is also wise to take into account deductibles that are associated with each policy when determining how much money you will need.
Some people are so discouraged by their late start at planning for this stage of life that they simply throw in the towel. However, you can see that your initial efforts in each of these areas can help you to get on the right path. Even though you think that you may be far behind others of your age, you may be in a better position than you appear to be at first glance. When you make these important resolutions and start acting on them quickly, you can move forward with a confident footing as you approach your non-working years.
Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.