Retirement planning brings forth a bit of excitement in everyone. Who doesn’t want to live without having to work everyday? Your days will not be filled with activities that you love and choose to do. You are no longer driven by the mundane responsibilities that society used to impose on us. All the kids are grown up and supporting themselves. Now, all that you have to worry about is yourself.
But sometimes, retirement is not as we expect it to be. A lot of things can go wrong when you retire – especially when it comes to your finances. Since you are no longer working, you need to rely on the benefits that you are entitled to and the savings that you raised while you were young. If you fail to save, that can really make your retirement life quite miserable and restrictive.
This is the reason why retirement planning is essential if you want to live your dream life when you retire. There are many things that can go wrong and you want to avoid these mistakes as you plan your retirement.
5 important issues to deal with while planning to retire
There are actually 5 important issues that you need to resolve as you make your retirement plans. It is vital that you consider them to determine how much money you will be needing to raise. Starting early is very important so you must take time to do this now.
Here are the 5 issues to tackle in retirement planning.
Do you have debts? This is a primary concern for retiring individuals. Almost all of them have mortgages, credit cards and even student loans to pay off. You want to eliminate these as much as possible. If it cannot be eliminated, at least get rid of most of them. There are debt relief options that you can use to help you tackle your debt problems. It is wise to understand the different options that you have so that your retirement money will only be used for your needs – nothing else. Identify how much money you need to raise on a monthly basis and how long you have to go to pay them all off.
What benefits are you entitled to? The next issue that you need to determine is the benefits that you will be receiving when you retire. It differs for everyone but the general sources of retirement money comes from your Social Security and the 401(k) retirement savings that you were putting aside while you were working. You can look into the SSA.gov site to calculate how much you can expect to receive from your Social Security benefits. If you have ailments, disabilities and other provisions associated with your profession, you need to look these up and find out how you can maximize the monetary assistance that you can receive after retirement.
Where do you want to retire? It is also important to think about where you plan on retiring. The location will help you determine the cost of living that you have to finance. This will basically determine the cost of the basic necessities that you have to raise. For instance, if you own your home and you have fully paid it off, all you have to worry about is the property taxes and the seasonal maintenance that it has to go through. If you are renting, all you have to worry about is the rental price. What are the costs of the basic commodities? This particular issue needs to be detailed for you to make a near accurate assumption of the daily and monthly costs you have to deal with.
What will you do with the time that you have? A part of your retirement planning should include the activities that you will do in your spare time. Will it require you to spend or will it generate you income? Some retired individuals choose to put up a small business to keep themselves busy. Some indulge in their hobbies. These tasks will help determine the lifestyle that you will live – and whether it will cost you a lot or add to your cash inflow.
Do you have any health conditions? One of the important preparations that you need to go through involves your health. When you retire, you will not be as robust as you once were. You need to anticipate that there could be health conditions in your elder years. Since medical expenses cost a lot, you may want to consider saving up for it. That way, you won’t have to worry about the expenses when the time comes for you to get medical treatment.
Feel free to use online retirement calculators that will help you determine the amount that you have to save up for. The AARP.org site has a conprehensive retirement calculator that you can use. There are also other financial sites that you can look into for help when it comes to calculating your retirement needs.
Options to get out of debt before you retire
Among the 5 issues, the most pressing need that you have to deal with is paying off your debts. While there are debt relief options for retired individuals,you want to get rid of them before you actually enter your retirement. That way, you can fully utilize your retirement money for your own needs.
Here are a couple of your options:
Debt consolidation loan. This option will require you to get a master loan that will pay off your other debts and leave you with only one debt to deal with. This should make it easier because it will provide you with a lower monthly payment scheme for 3-5 years. Unless of course, you include your mortgage loan in it and you will have a much longer term. This is great for credit card debts as it will lower the interest rate.
Debt management. This option involves a credit counselor who will help you create a debt management plan. This will get you a single and lower monthly payment plan. This will be negotiated on your behalf by the counselor and when the creditor agrees, you can implement the payment plan. This is usually best for unsecured debts and can go as long as 3-5 years.
Debt settlement. This debt solution involves debt reduction. It focuses on negotiating with creditors to allow you to pay only a portion of your debts and have the rest forgiven. You can opt to hire a professional to help with this or you can work on it alone.
These three will help you achieve a debt free life in a short span of time. At the very least, you can eliminate your high interest debts that could eat up a lot of your retirement money.