At times, life’s unpredictable events and surrounding conditions can make it challenging to steer our own path. Though maintaining full control over every aspect can be tough, prioritizing this becomes essential as retirement approaches.
Ideally, you’ll want to enjoy your later years on your preferred terms, which is entirely possible despite certain uncontrollable factors.
For most individuals entering retirement, key concerns often revolve around physical health, financial stability, and emotional resilience—issues that echo those faced during one’s working years. Shaping a fulfilling retirement begins long before the actual transition.
Here are four practical strategies to help secure a comfortable retirement.
Build Savings Habits from the Outset
Starting to set aside funds early in your career can lead to a substantial nest egg by retirement. Financial experts commonly recommend allocating around 10% of your income to retirement accounts, but there’s flexibility to exceed this if circumstances allow.
Reflecting on it, your savings represent one of the most direct ways to influence your financial future—deciding the amount and timing is in your hands. Throughout your employment, raises and bonuses accumulate, and those who thrive in retirement often channel these into their savings.
Interestingly, loyalty to a single employer over an extended period can yield significant long-term rewards, contributing to greater financial security. Frequent job changes, on the other hand, might limit the benefits accrued, such as employer-matched contributions or vesting schedules, potentially leaving you with less overall support.
Strategize Your Investments Carefully
Well-prepared retirees often maintain a reliable income stream, which could stem from part-time work or savvy investments like real estate, bonds, retirement income funds, or a self-directed IRA (SDIRA).
A self-directed IRA offers enhanced flexibility, allowing investments in alternative assets such as real estate, precious metals like gold, or even stakes in limited liability companies (LLCs). Partnering with a knowledgeable investment firm ensures your portfolio is well-diversified, unlike traditional IRAs that restrict options to specific asset types. For instance, diversification helps mitigate risks, as supported by data from the U.S. Securities and Exchange Commission, which highlights how spreading investments can reduce volatility.
As you age, opting for lower-risk investments becomes crucial to protect your assets. At this stage, recovering from a poor investment decision can be more difficult, underscoring the need for cautious, informed choices.
Eliminate Housing Debt
A common trait among those who retire smoothly is having cleared their mortgage and achieved full homeownership.
Mortgage payments represent a major ongoing expense, drawing from either savings or earnings and potentially straining your budget. Accelerating payoff not only cuts total costs but also minimizes interest accrued over time—for example, the average 30-year mortgage might involve paying double the principal in interest alone.
Clearing this debt early frees up resources and reduces monthly financial pressures, giving you greater peace of mind. By retirement, having this flexibility allows for lifestyle choices like downsizing or relocating, though decisions should consider factors such as current interest rates; if they’re low, it might be wiser to continue payments rather than rush.
Maintain a Stable Partnership
While this advice might seem personal, it has direct implications for your financial outlook in retirement. Divorce is a serious decision with valid reasons, and no one should interfere, but from an economic perspective, it can have lasting effects.
Research from the Ohio State University’s Center for Human Resource Research indicates that divorce can slash household wealth by as much as 77%, while each additional year of marriage typically boosts wealth by about 4%, assuming other factors remain steady. Beyond wealth, marriage provides access to spousal Social Security benefits, joint tax deductions, and exemptions from estate taxes on inheritance for high-net-worth couples.
These advantages can significantly enhance retirement security, illustrating how relational stability intersects with financial planning.
Retirement doesn’t arrive unexpectedly; we have ample opportunity to prepare. While some elements will always be beyond our influence, proactive planning in areas like finances and lifestyle can lead to a secure, enjoyable post-career phase.
