Follow These 5 Steps to Start Your New Year With Retirement in Mind
For some people, New Year’s Day is just another day to make promises they won’t keep. Only 7% of people actually keep the New Year’s resolutions that they make on New Year’s Day. And most don’t even plan for their potential retirement. The typical American will spend at least 20 years in retirement in their lifetime. So, here are five ways to start your New Year with retirement in mind.
Start Planning Your Retirement Number
If you want to start your New Year with retirement in mind, you need to begin calculating your retirement number. And to explain why you need a retirement number, let’s first explain
Retirement does not occur within a vacuum. And unless you begin planning as early as possible, you won’t be able to retire, retire on your own terms, or retire long-term.
A retirement number is an elderly lifestyle fund designed to pay for your living expenses for the rest of your life. “Retirement” should be shorthand for “retirement fund” for your needs.
And the average age of retirement is 62, but most people live until the age of 80.
So, you need to calculate how much money you need in your retirement fund to last you through the entirety of retirement. If your retirement number is not correct. Then your retirement fund could be exhausted before your die.
You could end up going back to work part-time in your 80s or early 90s.
How do you calculate a retirement number? You have to think about where you will live during retirement, the cost of your average expenses, and then calculate how much life in retirement will cost you every day, week, month, and year.
To start your New Year with retirement in mind, start planning your retirement fund as early as possible. The earlier that you start, the better. Consult the help of a financial advisor or retirement planning expert if possible.
Downgrade Your Life
Downgrading your lifestyle is the process of adopting a financially beneficially minimalist mindset when it comes to living.
You can start your New Year with retirement in mind by considering how to downgrade your life.
Remember the retirement number that I talked about? The average retiree spends $48,000 annually, or $4,000 monthly on their retirement expenses. If you live in a large metropolitan city, you will spend a lot more than $48,000 annually on retirement expenses.
To start your New Year with retirement in mind, you need to consider how to add money to your retirement number over the next decade.
You can start saving money for retirement by downgrading your life.
Instead of living in a large house, you can sell it to live in a smaller house or apartment. You can sell a large car to get a smaller, fuel-efficient model or start using public transportation.
Downgrading is a mindset when it comes to spending as well. Stop buying brand-name products and only buy generic brand products. You can save hundreds or thousands of dollars annually by doing that.
Sit down and calculate how you can downgrade your life? What can you minimalize in your life to save more money?
Pay Off Debts
The time to completely pay off your debts is long before retirement, not after. If you can’t stay on top of your debts now when you’re working, how will you deal with them when you are retired?
Downgrading your life will help to free up more money in your life to save and pay off your debts.
Develop debt reduction strategies with a financial advisor. Pay all your debts on time and in full. Develop a multi-year plan to pay off all of your debts with a debt-free day as a goal somewhere in the future pinned on your calendar.
Start your New Year with retirement in mind by pledging to become debt-free sometime in the long-term future. You will have no future retirement with unmanageable debt, so start planning now.
Work As Long As Possible
Start your New Year with Retirement in mind by endeavoring to work professionally for as long as you are able to do so.
If you retire at age 62 or 65, then the countdown to your retirement fund running on empty officially begins. Once you are retired, you have officially entered post-working life. And unless you qualify for Social Security or have other revenue streams, you may have to live solely on your retirement fund.
By working as long you are able to do so, you can save more money. You could even become part-time retired for several years so you can live off your working income and a minuscule portion of your retirement fund until you are fully retired.
Meanwhile, you can start planning to delay receiving Social Security benefits until you are 70. If you wait until you are 70 to receive Social Security, while working and saving in the meantime, you will receive 132% of the monthly benefit.
And by waiting until you are 70, you will have an extra source of income to add to your retirement account.
Apply for a Pension or Retirement Account
Start your new year with retirement in mind by asking at your job about pension plans or retirement accounts.
Such retirement-saving opportunities may be available at your job unbeknownst to you. Talk to your job about IRS or 401(k) plans and how to apply.
The earlier that you start a retirement account plan, the better.
Start Your New Year With Retirement in Mind
Retirement is a lifestyle fund for you or yourself and a spouse. The earlier that you start planning for your retirement, the better your plans will be executed in reality.
Consult a financial advisor with experience in retirement planning. If your New Year’s resolution is to start planning your retirement, stick with it.
The earlier you start, the better off you will be.
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