Preparing for your financial future: What you need to know about retirement planning

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Most people think about retirement planning far too late in life, which can lead to a lot of stress and anxiety down the road. The fact is, the earlier you start saving for retirement, the better off you’ll be in the long run. Here are some tips on how to get started.

Happy smiling young couple calculating the family budget at home

Start saving for retirement as early as possible.

When it comes to investing, you need to start with a plan and stick to it for many years down the road. Experts recommend that you invest 15 percent of your income to be financially ready for retirement.

If you want your savings and investments to grow exponentially, consider setting them up on autopilot. If you’re uncomfortable with doing it yourself, you can always hire an investment advisor to do it for you. The financial professional should focus on helping you grow your investments to ensure you’ll become financially secure in the future.

Invest your savings wisely.

For your investments to give you returns that will cover all of your costs in retirement, such as healthcare and lifestyle expenses, they need to grow exponentially. The only way for this to happen is if you invest in riskier assets that have the potential for high growth.

If you want to invest in the stock market but are uncomfortable with taking risks, consider setting up a portfolio that’s fifty percent stocks and fifty percent safer assets. This way, you’ll get the returns you need without taking too much risk.

Draw income from your savings and investments.

When you’re ready to start drawing income, there are two general rules to follow: draw less than 4 percent of your savings every year, and only use money that you won’t need for at least 10 years.

The main reason why people run out of money before they die is that they withdraw more than 4 percent of their savings every year. You can avoid this by making sure to set up an income strategy beforehand, so your investments will be able to provide you with the income that you need in the future.

Many people think that they can make money from their savings after 10 years, but if anything, this is even riskier. This is because it’s harder to predict what your needs will be down the road, and it might force you to withdraw more than you can afford when the time comes.

To make sure your money lasts for as long as you need it, draw income only when you have to. If this means that you don’t use all of your savings immediately, so be it. This is because the sooner you start drawing income, the less time it has to last without becoming depleted.

Review your budget and make changes where necessary.

Once you retire, your monthly budget will likely change significantly. For this reason, it’s a good idea to go through and review everything that you’re spending money on throughout the month.

It may be the case that certain costs aren’t necessary anymore, such as commuting expenses or gym memberships. If so, cut back on them to ensure that you’ll have all the money you need in retirement.

The more expensive your lifestyle becomes in retirement, the more likely it is that you’ll run out of money before you die. Therefore, make sure to evaluate whether or not your current spending habits are sustainable in the future.

Delay claiming Social Security benefits until you reach full retirement age.

People often think that they can get more out of Social Security if they claim their benefits as soon as possible. In reality, the opposite is true: you’ll get a greater return if you wait until your full retirement age to claim them.

By delaying your claims for three years, you’ll be able to qualify for a higher monthly benefit. You could even wait as long as age 70 to make sure you’ll receive the most out of your benefits.

Consider working part-time in retirement.

Many people are afraid that their days of hard labor are over once they retire, but this isn’t necessarily the case. Contracting your services to a company part-time can be an excellent way of earning extra money in retirement.

You may not want to do this for the rest of your retired life, but even one or two days per month can bring in a lot of extra income. Just make sure not to take on more than you can handle, as this could lead to additional stress and bills that you won’t be able to cover.

Stay healthy and active to help prolong your retirement years.

A lot of people think that they’ll live forever if they just keep healthy, but this isn’t necessarily true. Even if you follow all the rules and eat right, your good habits won’t matter much unless you stay active as well.

This doesn’t mean you have to run marathons and climb mountains every night: it’s enough to be active enough so that you feel good and get tired by the time you go to bed. This will help put your mind at ease since it won’t constantly be worrying about how healthy you are or what could happen if something goes wrong.

To have a financially secure retirement, it’s important to start planning and saving for it early on.

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