Retirement can sneak up on you. You are busy with other things in life that demand your attention, such as work, school, raising children and pursuing your other life goals. Before you know it, retirement time has arrived.
Many people find themselves scrambling to figure out how to support the lifestyle they’ve grown accustomed to, even after retirement. Don’t let this happen to you. Take the following steps to plan ahead for your future, so you can enjoy a high quality of life without worries about money.
Determine What Your Employer Offers
This is the first, and perhaps most important step in determining your goals for retirement. You will likely have Social Security benefits available to you once you retire, but you can’t depend on Social Security to fund your whole retirement. Determine what your employer offers in the way of a pension plan, 401k or other retirement plan. If you are prior service military, you may have a military pension or a Thrift Savings Plan (TSP) account that will be accessible to you once you retire. You may also have other forms of retirement income from a spouse, stocks and mutual funds or other sources. Make sure you have these sources of funds all lined up, and know how to access them once you reach the proper age.
Determine How Much Your Income Will Be
After you have determined where your income will be derived from, it’s time to determine how much you can expect to receive from each income source. Your payments may be issued monthly or annually. This will help you determine if you have enough to be able to retire comfortably, or if you need to find other sources of retirement income before you get to the age where you are eligible to retire.
Determine How Much Income You Will Need
You also need to figure out how much money you will need to fund your lifestyle once you retire. Keep in mind that you will have all of the same costs that you have now. Housing, utilities, transportation and food and other necessities all need to be added into your calculations. You should also add in trips, vacations and other “fun” money. If your retirement income won’t be enough to pay for these things, you either need to create more retirement income from stocks, bonds, mutual funds and other sources, or you will need to look into another job after retirement.
Pay Off Debt Now
One of the best ways to ensure that you are ready for retirement is to pay off as much debt as you possibly can before your retirement date. Make a list of all of your debts, to include loans, charge cards, credit cards and mortgages. Start with the smallest bill first. Make payments on this debt until it is paid off, and then start chipping away at the next debt. If you have unused assets, such as a car or vacation home that you can let go of, sell these off and use that money to pay off debts and lower your balances. The best plan is to go into retirement debt-free so you don’t have to worry about how to make your monthly payments to creditors.
Not sure if your finances are ready for retirement? Your best bet is to seek the services of a financial professional to help you assess your situation and make any changes now, so you will be ready when retirement looms near. Contact Community First for an appointment, so we can help you ensure that you are ready for retirement.
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