Making Retirement a Reality: Basic Planning
Retirement may be something you are considering in the back of your mind, but aren’t sure how to make it happen, or if you’re even ready. Even if your finances mean you’re ready, if you don’t have a plan, you may not be ready after all!
Here are some basic planning tips for making retirement a reality.
1. Consider Your Income Needs
Sources say that most people will need about 70 to 80% of their current income level in retirement…that is, of course, if you plan to maintain your standard of living. You can downsize, but that’s not what we’re discussing here. Here are some things to think about as you consider your income needs for your retirement.
* Will your kids or grandkids be living with you? If not, then you will see a drop in income need once your kids and grandkids are out on their own.
* If you have a mortgage, look at when it will be paid off. It’s pretty amazing how your need for income decreases once you no longer have to feed the mortgage beast!
* When you retire, you won’t be putting money toward retirement savings, so you can count on having that money freed up.
* Is your home old or high maintenance? If so, then take potential repairs into account. They can get expensive pretty quickly, and you may decide to move in order to save money and stay within your income.
As you can see, your income needs definitely change as you near retirement.
2. Where’s the Money Coming From?
It’s vital to determine this as part of any basic retirement plan. You’ll find that retirement income generally comes from government sources, employer-backed plans, and personal savings. Social Security is the most common form of government-funded retirement funding. Find out how much you will be paid in Social Security, check with your employer’s plan if you have one, and assess your personal savings carefully. It doesn’t hurt to check with a professional.
3. How Will You Spend Your Time?
This is something to consider pretty carefully, and it’s an area where plenty of people fail to plan. Some retirees even experience depression or simply feel unhappy if they are not doing some sort of work. So an important part of making retirement a reality is to recognize just how much you want to retire. This may be a time to get into a hobby you’ve been putting off, or you may decide to work freelance or part-time at your current job instead of retiring altogether.