A common question many people ask themselves about retirement is whether or not they’ll have enough savings to spend their golden years in comfort. Want to know if you can afford a life after work? Here are six suggestions to help you find out:
Determine What You Want to Do When You Retire
Figuring out what you want to do once you retire will help you financially prepare for it. Do you want to travel? Are you interested in taking up an expensive hobby? Do you want to move somewhere warm? However you decide to spend your final years, it’s a good idea to make a plan based on what you desire. Set aside some time to make a road map, by jotting down the places you’d like to travel to, where you want to live, what kind of housing you want, etc. By planning what your golden years might look like, you can better create a savings goal.
Run the Math
Once you have an idea of what your retirement might look like, you can estimate how much it might cost. Spend time researching costs associated with housing, travel, hobbies and other items on your list. Remember to consider health care costs like Medicare premiums, deductibles, copays and insurance. When you’ve finished your research, compare the costs for your dream retirement to your estimated income. If you have enough to cover the lifestyle you want that’s cause to celebrate! If not, you’ll need to make some adjustments. This means building up a bigger nest egg to achieve all your goals, or cutting back on some of those goals to reduce your retirement costs.
Adjust Your Budget
It’s a good idea to go over your budget and tighten it up to save more money for your retirement. This can be as simple as replacing cable with a Roku or other streaming device, eating out less often, or cutting back on your grocery budget. If you can sacrifice something now to save a few dollars every week, that extra money will go a long way toward retirement. The earlier you start, the more money you’ll save. You’ll also get in the habit of saving money and taking care of your finances for the future.
Consider Bringing in Additional Income
If you’re just counting on social security benefits and the money you’ve saved to meet your retirement goals, you may want to consider additional income sources to give your nest egg a boost. By adding additional revenue, you may not have to save as much from your main paycheck and your goal will be easier to achieve. Consider taking on a part-time job or side gig that you can continue in retirement. Not only will you have more money coming in, but you’ll also find it easier to transition from working full time to not working at all. Buying an annuity with some of your retirement savings is another good option.
Make Saving Money a Priority
Your retirement savings should be a top priority early on in your adult life. Don’t push it aside just because your final day of work is a long way off. Sit down and figure out what you’d like to save money for in retirement, then make your plan. Start by:
- Setting a timeline to reach your goal.
- Creating a schedule that divides your total money goal by the number of months between now and your retirement date, so you know how much you need to save.
- Treating your savings contribution like your other necessary expenses – mortgage, groceries or utilities.
- Setting up an automatic savings withdrawal. If you never see the money, you won’t be tempted to spend it. Have a portion of your paycheck deposited automatically into a separate savings account.