People expect different things from their retirement. For some, it’s time to relax, sit back at home or spend more time with their families. Some would want to pursue their beloved hobbies like gardening or travelling with the money they have. But, for some people retirement is another opportunity to pursue their dream and invest in some business or work part time to make extra money. No matter what you want to do in your retirement, you must be prepared financially before you actually retire.
For that perfect retirement time you need to plan for it way before than you can imagine.
Thinking of dream retirement? This is what you need to do:
1. Have a vision
It is important to have a goal or a vision as to what your retirement should look like. According to a report, retirees are now spending more money than what they used to pre-retirement. This is good news which suggests that with good planning you can create your dream retirement.
Whether it’s pursuing a PhD degree or investing in some business or travelling around the world or buying a property, you should have a clear vision. Because, it will help you save accordingly. If you are unable to decide how much you need to save a professional financial advisor can help you with your retirement calculations.
2. Know your all income sources
It is important to have a full knowledge as to how much you have saved so far. You must have money saved in saving account, retirement fund, emergency fund, social security benefits and employment provident fund and so on. You need to have a clear idea how much you have saved so far. This will you keep track of your retirement planning.
There are other unofficial sources of income as well. Say you are going to inherit in the future, or you are an amateur writer or antique collector – all these things can too add up to your retirement savings or as alternative income source after you retire. It is therefore important to be aware of your talents, possible income sources and your actual savings.
3. Start Saving as early as possible
This point is always stressed when it comes to saving for retirement or for anything. Starting in your 20s gives you an upper hand. With only saving 13 to 15% of your income at this stage you can gradually reach a very comfortable number by the time you retire.
Even if you start late it doesn’t matter. With the right direction and guidance you can easily save enough for your retirement.
4. Know where you are health wise
It might sound scary or alarming, but it is important to evaluate your health condition. The number of retirement years you are planning also depends on your present health condition. If you are suffering from some serious illness which may not be life threatening but it will consume large part of your income, your retirement saving plans will depend on it.
Regular visits to the doctor and evaluation of your present health condition will help you take care of your well being especially when you have a family to support and a spouse who will depend on your retirement savings.
5. How much you are going to need for retirement
Even though the spending in the retirement was more according to the study, it doesn’t mean it will always be the same. The same report also suggested that spending will drop after three years into retirement.
While there is no fixed number as to how much you need to save since everyone has a different goal, a general rule of thumb is to save 70% of your pre-retirement income on your retirement savings. This will help you in your dream retirement planning.
The cost of living does go down as you retire since you don’t have to spend money commuting to the work, spend money on work attires, lunches and tax bills too come down. Even then you need to have at least 70% of your pre-retirement income for a comfortable living post retirement.
6. Claiming your social security benefits
One of the key elements in retirement planning is of course your Social Security benefits. The more you delay in claiming it the greater is the reward. If you claim your retirement benefits at the full retirement age or even delay it for a couple of years, you will have 100% benefit. On other hand, if you claim it earlier before the full retirement age you may only get 70% to 99% benefits. So, it is safe to say that the longer you wait for claiming your social security benefits the better.
But, you will need to save enough so that you can enjoy your retirement without depending on your social security benefits. This is one of the best ways to increase the amount of money you will have in your retirement.
Retirement planning is one of the most important parts of financial decisions you take in your lifetime. The earlier you start the better. Know what you want, what you need to do and how to benefit more from all the schemes put together so that you can enjoy your dream retirement time.
Start your retirement planning today