It’s not at all that surprising to see that nearly four out of every five people seeking guidance on financial planning indicate that planning for retirement is their number one priority. As retirement nears, your goals and priorities will begin to change as you prepare for the transition, and it becomes ever more essential to have a solid financial plan.
If you plan on retiring in the next 5 years or more, you should try running a basic retirement calculation, at least twice a year, to check if your potential retirement savings will be enough to meet your income needs in your retirement.
If you’re not on the right track, you have to either find ways of increasing your funds by saving more, investing more aggressively, or generating some extra income in other ways.
Here are some tips that will help you prepare more adequately for your retirement years:
#1. Put your retirement spending plan to the test
Make sure you have a budget or personal spending plan in place, and put it down on paper. Knowing where your money is today will help you approximate your planned expenses during your retirement. Create a budget plan that will estimate your expenses when you retire so that you have a dollar amount ready for your income goal.
#2. Deal with potential health problems now
If you are concerned about your healthcare raising your cost of living during your retirement, your concerns are quite valid. You can take steps to better maintain your overall health in order to reduce out-of-pocket costs later on.
Usually, most people know what to do, but fail to take action and follow through on the steps needed to proactively enhance their health and well-being.
#3. Reduce your transportation costs
Cars have become an integral part of modern existence and no one is saying you shouldn’t buy one or change an old one after a reasonable amount of time. However, if your history of buying cars includes substituting your vehicle every 3-5 years with a brand new one, you could be adding an extra expense to your retirement. Buying a decent, used automobile and establishing a car replacement fund before retirement are options to consider.
#4. Seek advice before making important decisions
Cost optimization should always be seen as an ongoing development that is required during your years of work and throughout retirement. If you’re working with a finance professional, ensure that you use your cost optimization exercises as a springboard for eradicating debt and channeling your resources into smart investments, savings and estate planning.