Planning for Retirement Begins Today

If you find yourself blowing the candles on your 40th or 50th birthday cake, you’re probably already thinking about retirement. But, it’s not as simple as signing a piece of paper and packing our bags to somewhere warm and sunny. There are some things to think about and calculate before planning your retirement party.

First, there is the retirement age problem. If you want to retire a little earlier, you can at age 62. This is the minimum social security age to retire. You can also start receiving benefits. However, when you reach 67, your benefits will be smaller by about 70 percent. And when you’re 65, they are 87 percent. This reduction is why most people choose to retire later or at least delay collecting benefits. It’s no wonder why people often start saving for their retirement.

retiringIf you reach 66 without collecting benefits, you will get 8 percent of the benefits added to the total amount for any additional years you don’t touch your retirement benefits. Simply waiting until you’re 70 can net you an extra 32 percent.

Because not everyone can afford to wait until age 70, relying on social security retirement benefits might not be the best idea, at least for a few years. So, how can you help your future self? By saving early and sticking to it. Here are some strategies to live your twilight years at ease:

  1. The first step is to always plan ahead. Calculate how much you will be needing after you retire. Include unpaid mortgages, healthcare (if you need it, and you probably will, as you get older), hobbies and entertainment, any and all other funds. A good reference point is how much you currently get per year. Is that enough? Would you need more?
  2. Next, calculate how much of that needed income will be covered by social security, pensions, dividends, etc. See if you can live comfortably without savings, but if not, calculate exactly how much you will need.
  3. If you started saving now, consider how big your monthly savings would have to be to cover those extra expenses. If you would have trouble making ends meet, you’ve got a problem. Think about cutting some costs somewhere, maybe selling the house and moving somewhere more affordable, or giving up on some luxury hobbies.
  4. Remember your health. We might feel indestructible now, but that can change in a heartbeat once you’re older. Never underestimate how much healthcare bills can cost, so either shield up with the best and biggest health insurance or have an extra lump sum in the bank for any emergencies.
  5. If you’re having trouble doing the math, there are always professionals, who can help you out. Whether it’s an online calculator or a real person, if you feel like you need help tying up loose strings, use it. After all, you might not work at your current position until your retirement or you might get lucky and win the lottery – either way, your retirement plan can and probably will have to change with time. Don’t brush it off as something you’ll get to ‘eventually.’

Retirement is something to feel happy about. It’s a time to remember the days gone by and to be remembered for your accomplishments. You make the choice of how you spend that time.

Whether it’s sailing a yacht around the Mediterranean, studying old books at your local library, or partying with your grand-kids, it all comes down to you. You can start saving for that time now or later, risking living a life at ease over struggling to make ends meet. But you have to start somewhere, so why not now?

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