Whether you are young and just starting to earn your fortune or you are nearing retirement age, it’s a good idea to have a retirement plan in place. If you are young, you may question why you should look at this now, however, planning for your retirement could be one of the most important things you plan for in your life.
At the end of the day, no one wants to get to retirement age and realise they haven’t done what they needed to for them to be able to enjoy the type of retirement they have been thinking about.
Retirement is certainly not something to take lightly, you are much better off looking at your plan sooner rather than later, so, let’s have a look at some of the things you should think about.
Think About Your Budget
If you want to plan properly for your retirement then you need to face the fact that you are going to need to have a budget in mind. So, how much will you need to live off each month to be able to have the same lifestyle as you have now? An estimate just isn’t good enough. You should start by looking at what you are spending now, or if you have a while until retirement and your expenses are likely to change majorly, have a look at someone who is near retirement and what they spend monthly. Look over your bills and bank statements and then figure out how much you are spending monthly, looking at your current monthly spending is a good way to figure out how much you may need to save.
Look at Your Income
You need to start looking at the income you are expecting to receive from any state pensions or other pensions plans you already have. If you’re not happy with the figure or it is much lower than you need to cover your daily living costs, you need to think about putting a plan into place to secure your financial future. Using retirement calculator free online are a great way to figure out how much you need to be putting away each month to get the income you need for retirement. On the other hand, if you are a high-earner, you may want to look at things such as Mega Backdoor Roth: Tax Saving Retirement Planning for High-Earners as a way to secure your income for the future.
Get Rid of Your Debt
This may be easier said than done, however, the sooner you can get rid of your debt the more you can relax when it comes to your pension income at retirement. The last thing that you want is for your pension to be eaten up from debts you are still paying off. This includes things such as your mortgage, so try to plan to have this paid off before you retire, or a plan to use a lump sum payment to pay the remainder of your mortgage. If you can get out of debt earlier in your life, you are bound to see the benefits, such as being able to afford life’s luxuries.
Have you started to think about your retirement? Please share some of the things you have thought about it the comments below.