After many years of working and saving, you can see retirement on the horizon, even if it isn’t happening right now. Let’s say that you plan to retire in the following 10 years; then you need to prepare for the event to ensure that you’ll enjoy a comfortable lifestyle. It’s crucial to examine your income sources in advance of the target date to have time to make any needed adjustments.
Discuss with your partner and try to envision the kind of retirement you’d like. Would you like to work part-time from home? Travel with your partner? Volunteer with a local organization? Once you decide, you can develop a realistic plan based on your financial resources and identify the steps you must follow to support it. You’ll probably also find some gaps in your plan, and you’ll have to determine how you can use your resources best to match your vision. When analyzing your current expenses, you can identify the items and actions that you must eliminate or reduce. Make a list of monthly purchases to determine if you can cut some back to save money you can invest for your retirement.
This article presents a couple of steps you should follow if you’re approximately ten years away from your retirement.
Create a timeline
You know you’ll retire in the following ten years, but when? At what age do you want to stop working? How old are you now? The difference between these ages is the number of years you have to prepare for your retirement. You can create an investment timeline and reflect how much risk you can take. A good idea would be to invest in securities, but only if you have knowledge about them.
Write down what large purchases you want to make
You may dream of making some large purchases when you retire. Maybe you want to buy a vacation home or a boat and sail the world with your partner. If so, you need to save money for this particular purchase. Or maybe you want to use the retirement funds to pay for your grandchildren’s college. Set goals and be honest about the large purchases you can afford when you retire. You can dream big, but ensure that your financial plan covers these expenses.
Decide if you want to work
Retirement shouldn’t be a synonym for the end of your career. You can continue to work because retirement means slowing down not coming to a full stop. You can choose to work part-time, so you can make some extra income and support your lifestyle. Supposing you have a skill you can transform into a consulting or teaching gig, a part-time job can keep you busy and generate money. However, it would help if you were careful when you rely on your continued income to fund your retirement because your health or the job market can prevent you from working. Your part-time gig should account only for extra income and not the primary funding solution.
Research what options you have to downsize your debt
If you have a mortgage on your house, consider accelerating the payment to pay off the debt before you retire. Pay cash for major purchases to limit new credit card debt and boost the amount of retirement income.
Calculate your retirement income
Estimate your retirement income by calculating how much you’ll get from sources like employer pensions and social security. A part of your retirement income can come from savings, investments, and other income sources. When you put all these sources of income together, do they make enough to support a comfortable lifestyle? If you still need money, you can apply for Bloom Reverse Mortgage that is a loan a homeowner over 62 can get if they have considerable home equity to borrow against the value of their house. You can get the money as a lump sum or in fixed monthly payments, and you won’t have to make any payments. The loan balance becomes due when you sell the house, move away, or in case of death.
Estimate your retirement expenses
Some expenses can grow with age, while others may decline. For example, as you’ll no longer have to go to work daily, you won’t need to buy clothes and shoes as often as now. But you may have to spend more on healthcare. Your retirement lifestyle will dictate your expenses. If you plan to travel during your retirement years, your estimated costs will be higher than they’re now.
Estimate your retirement withdrawals
Create a hypothetical retirement budget that includes the expenses and income. Consider all expenses sources from food to utilities and entertainment. It’ll help you determine how much money you have to withdraw from your retirement account to live comfortably.
Estimate future medical costs
If you retire at 62 or older, your health insurance should cover most routine health care expenses. However, you should also get supplemental coverage to help you save on non-routine medical care, which is likely to rise as you get older. Most healthcare insurance policies don’t cover long-term care costs, and you should get in touch with your insurer to change the coverage for one that fits your needs better.
It would be a brilliant idea to buy long-term insurance because it covers expenses like home health aid. When you purchase coverage in advance, the premiums are lower than if you’d get it after you retire. If you have a health saving account, put in the maximum contribution.
Decide where you want to live
The place where you retire can have a significant impact on your expenses. If you decide to move to an expensive location, your savings can decline sharply, and you may have no funds left to support your retirement. But if you sell the house and move to a more affordable location, you can save money to fund travel. A good idea is to sell your house and move into a smaller one with more minor expenses.
And here are some of the steps you should follow when you prepare for retiring.
