Mentally, you’re ready for retirement. But on the other hand, you also have worries about supporting yourself or your spouse on a fixed income, among other things. Luckily, readying yourself for retirement is easier than you think. You may not have a thorough retirement plan, but starting small and working your way up to bigger goals can make all the difference as you near your golden years.
Here are 13 tips to help you prepare for retirement from US News My Money.
1. Let Go Of Financial Worries
Rather than staying away from your financial circumstances, approach them head-on. Go through your monthly expenses with a fine-tooth comb and see how they match up to your regular income. When you have a better idea of your financial situation, you’ll be able to figure out how much you can safely afford to save every month.
2. Rip Off The Band-Aid
Commit to saving a set amount for retirement each month, like $50 per paycheck. Pay yourself first before it disappears on bills, gas, or discretionary purchases.
3. Pick One Debt And Pay It Off
If you owe money on a credit card or a personal loan, check how much you still owe. Next, develop a strategy to repay it, like paying an additional $100 every month on the loan until you pay it off.
4. Enroll In A 401(k)
Set up a 401(k) and take advantage of the employer match program. Then, ask your employer to automate your contributions each paycheck. This will help you save without thinking twice about doing it.
5. Take Advantage Of Auto-Escalation
Depending on your plan, you may be able to take advantage of a feature called auto-escalation, which incrementally increases your contribution amount. “This will automatically increase the contribution to a 401(k) plan by a minimum of 1% on an annual basis,” Brian Carney, RiverseEdge Advisors co-founder, told US News My Money.
6. Get Motivated About Saving
Think about three things you’re most excited to do once you retire. Paul Tyler, Nassau Financial Group’s chief marketing officer, explained, “If you have a positive vision of your future self, behavioral finance tells us that taking those next important savings baby steps will only get easier.”
7. Determine Your Net Worth
Calculate all of your assets, including your home, vehicle, cash, and investments. Next, deduct your outstanding debts like your home loan, credit card balances, etc. The figure you get is your net worth, which can tell you a lot about your financial circumstances. Use an online calculator to find this number easier.
8. Grow Your Wealth
After you have an idea of your net worth, you can find ways to grow your wealth. You could start with one simple change, like saving $25 more each month, to increase your net worth.
9. Consider Retiring Later
If retirement is right around the corner, think about the difference that working one more year could have on your retirement plans. Delaying your retirement could allow you to pad your account or finish paying your mortgage, which could free up even more funds for you.
10. Think About A Side Gig
Besides saving, you might consider finding a part-time side job to supplement your income and give yourself something to do. If you prefer to work from home, look for online jobs or use a skill to make money.
11. Set Up A Social Security Account
You can enroll in the Social Security program through the Social Security Administration website. Jeff Gove, the president of investments at Stonebridge Insurance and Wealth Management, explained that “From there, you can learn how much your Social Security benefits will amount to once you are able to claim. This is a helpful tool for those who are planning for retirement and want to know how much income they can count on.”
12. Improve Your Financial Literacy
You can find hundreds of financial apps that can help you create a debt repayment plan, monitor your spending, or boost your savings for absolutely free. Find something that matches your retirement goals, then stick with it. It can help improve your financial literacy and make it easier to prepare for the future.
Alternatively, you can also read a book about any personal finance topic you want to know more about. Consider sharing what you learn with your spouse to determine what you can use for your household budget.
13. Create A Will
If you haven’t made a will already, you can make one for free online — and in some cases, in a matter of minutes. Creating a will can take away some of the financial stress that comes with growing older.
- Hartman, Rachel. “20 Steps to Take When Preparing for Retirement.” U.S. News & World Report, U.S. News & World Report, 6 Jan. 2021, money.usnews.com/money/retirement/401ks/articles/steps-to-take-when-preparing-for-retirement.