There are moments when it feels as though the events unfolding around us hinder our ability to steer our own lives. While it can be challenging to keep everything under control consistently, taking charge becomes increasingly essential as you approach retirement.
You desire to enjoy your golden years on your own terms, and it’s entirely possible to do so, even amidst circumstances you cannot directly influence.
For the majority of individuals transitioning into retirement, the primary concerns often revolve around health, finances, and overall mental and emotional wellness—issues that are not too different from those faced while still in the workforce. The foundation for a successful retirement is laid well before your actual retirement date.
Here are four effective strategies to prepare for your retirement.
Start Saving Early
Beginning your savings journey early can significantly enhance the balance of your retirement funds. Although it’s typically recommended to allocate around 10% of your salary to your retirement savings, there’s no rule against saving more if you’re able.
Consider this: of all the things you can control, your savings stand out as one of the most significant. It’s entirely within your power to decide how much to save and when to start. As an employee, you’ve likely enjoyed raises and bonuses over time—those who savor their retirement often make the most of those increases by directing them into savings.
It may not seem apparent at the moment, but staying with the same employer for an extended period can lead to substantial benefits that pay off in the long run, enhancing your financial stability. Conversely, frequently changing jobs can limit the advantages you might have accrued by remaining loyal to one company.
Invest Smartly
<spanWell-prepared retirees typically maintain a consistent stream of income. This can come from part-time work or, even better, from wise investments. Excellent investment opportunities during retirement include real estate, bonds, retirement income funds, and self-directed IRAs (SDIRAs).
An SDIRA is a personalized retirement account that allows for greater diversification in your investment choices, encompassing options like real estate, gold, or even an LLC (Limited Liability Company). A proficient investment firm will help ensure that your funds are channeled into a varied portfolio, unlike standard IRAs, which often impose stricter limitations on the types and quantities of investments.
As you age, it becomes increasingly important to make conservative investment choices. If an investment fails, recovering your lost capital won’t be as easy as it once was.
Another common trait among financially secure retirees is that they have successfully paid off their mortgages and attained homeownership. Monthly mortgage payments can take a significant toll on both savings and income.
The sooner you can eliminate your mortgage, the more you will save in the long term. The longer you hold onto it, the more interest you will ultimately pay. Paying it off early can relieve you of monthly mortgage stress.
Upon reaching retirement age, you’ll likely yearn for more freedom rather than the burden of mortgage payments. You might consider downsizing or relocating to another state or even a different country, depending on your unique circumstances. However, if your mortgage interest rates are low, it could be more financially sensible to continue with your payments until the end.
Stay Married
This may seem like an unconventional piece of advice, but it has a direct correlation to your retirement. While there are legitimate reasons for divorce, it might not serve your financial interests to end a marriage.
A study by the Ohio State Center for Human Resource Research revealed that divorce can reduce your wealth by an astonishing 77%. Conversely, if you remain married, your wealth can increase by 4% for each year of marriage, all else being equal.
Marriage also brings various financial perks, such as spousal benefits for social security, tax advantages, and potential exemption from estate taxes on inheritance if your combined wealth meets certain thresholds.
Retirement doesn’t sneak up on us; there is ample time to prepare. While some aspects may be beyond your control—something true in many life situations—there are numerous aspects of your retirement that you can manage through thoughtful planning. By taking proactive steps now and during your retirement years, you can lead a comfortable, enjoyable, and secure life.
