Retirement or ‘The Golden Years‘ – the nice way to say ‘when you’ll have no more job and you’ll have to live exclusively from your pension, savings and probably investments. And, by the way, you’re gonna be old, so your medical bills will get higher‘.
To be honest I get chills, when thinking about this time in our lives. Not only because our youth would have passed, but because in many countries (mine as well), population is getting ‘older’, so this means the pension system is not as it used to be.
Take our grandparents for instance: they worked for about 30 years (paying very little in taxes) and already spent 20-30 years in retirement. Yes, some of them have small pensions, but my generation, in our country, will probably have almost nothing. At least not something that would allow us to afford too much food, medication and other expenses.
Even if your country has a better plan for its elder people, it’s always a great idea to also be prepared. If you don’t need the extra money, you can leave it as inheritance or just donate it.
So, today I’d like us to revise few proven things we should start doing today for our retirement:
Try to estimate how much money you’d need to retire
It’s pretty difficult to make such a ‘guesstimate‘, especially since most of us felt like budgeting for the next month was too difficult. And yet you can make at least some approximate calculations. Would you need about 200K? Maybe 300K?
The moment you have said an number it’s already easier to take the next steps. Just like with paying off debt: writing down how much you owe is already helping you create a plan and know how difficult or easy this is to accomplish.
Make a plan
Now, that you have all the data, start planning. Try to see how much money you should be saving each month, what pension systems you can use, how much you could invest etc.
While you0r initial plan won’t be perfect, it’s already a place to start from.
Start saving money
While you’re already trying to keep with everyday expenses, probably paying off debt and saving for your kids college, saving, even little money towards your pension goal is something you can and should be doing. You don’t need to save thousands of dollars each month (most of us can’t do it anyway), but even little money counts and compound interest will bring in some nice results.
Get rid of any addictions you might have developed
Smoking, gaming, anything that affects your finances should be reigned in. Stop wasting money on things that bring you no benefit. The money you stop spending like this, can be easily save for pension, debt payment or any other plans you have.
Make the most of any social security plans
401(k), IRA, anything helps. Meet your employer’s match, on 401(k) for instance. Why waste the chance to actually get some ‘free’ money. Of course this means spending less each month, but it will be worth it once you have to retire.
Look into investing
You might get scared about this idea, but smart investing can make your money work for you even better. Invest a little at first, to see how it’s going and grow your skills, then this can really push your retirement ‘forward’ together with saving money and frugal living.
Delay using your Social Security as much as possible
Not all people are willing to become totally inactive during retirement. The more years you can work, the best your financial situation will look like. Take me for an example: I run a small web design business, that already allows me to spend time with my family and work for few hours/day. This pays our bills and it’s a good way to be active and also involved in our family life.
As you can guess, I could work like this for many years, even well into retirement. So, if you still have your health and and would love to work at least part-time, when you are old, this would allow you to save a lot of money, by not ‘digging‘ into Social Security right away.
Create a clear budget once you’ve retired
Budgeting and keeping your expenses in check doesn’t end once you retire. It should be second nature already to not overspend and try being frugal as much as possible, without taking the fun in your life. Once retired, setting up a realistic budget will help you to not outlive your nest egg.
There are many personal finance books that allow you to learn many new tricks to get financially independent and secure your family’s future. There are personal finance blogs and forums, advisers etc. Keep on reading / learning / asking. The more you know about how to better make money work for you, the more chances are for a happy and stress-free retirement.
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