It might seem to be an easy task when you start to prepare for retirement but it is actually one of the most challenging endeavors to take on. For one, it is a completely different phase of your life. On top of this, you would need to go through it without a constant source of income from your day job. Part of retirement is usually leaving work and living off on what you have saved up.
This is a big part of why a lot of people have a hard time in retirement. The amount they have saved up might not be enough to get them through their daily needs in retirement. It is also possible that their idea of what they can do in retirement is not their reality simply because their savings cannot support their desired retirement activities.
A lot of these challenges boil down to how you prepare for retirement. A bulk of the work is to make sure that you have the finances to support you in retirement. For one thing, you need to have more than enough for your living expenses. You also have to start thinking about your retirement activities and how much you need for them as well.
All that is just the monetary part of the whole preparation process. Retirement might mostly be about saving for the future but it goes beyond that as well. Preparations also mean activities you will be doing and how you will be spending your time each and every single day. If you are nearing that stage in your life, here are some useful tips to help you prepare and plan for retirement.
Have a clear retirement plan
As you prepare for retirement, it is imperative that you have a crystal clear idea of what you will be doing. Remember that while working, you could be spending a great deal of your day in the office working. Once you retire, you have all those time on your hand to fill up. It could seem easy enough but without a plan, you could get bored real quick.
There are some people who choose to take on work while in retirement. The biggest difference is that they get to choose who and when to work. Some become consultants making use of their skills and expertise while others take on freelancing jobs. There are also some retirees who put up their own businesses according to their own pace.
You might also be looking at doing a lot of traveling in retirement visiting places and even family members. It is also a possibility that you spend a lot of time volunteering in the community or other non-profit organizations close to your heart. There are a lot of activities you can do and you need to plan for them before retirement.
Check your retirement accounts
As you prepare for retirement, it is also important to check how much you have in your retirement account. This is what will support you and your expenses in retirement. That is why it should be more than enough for what you need. You need to do this often as well since hackers target retirement accounts since people rarely check on them.
One of the reasons also why you need to check on your retirement account is to make sure that you are on track with the amount you need to save. You have a target at the beginning and as you near your retirement date, you have to check if you have saved up enough. Make sure you are able to check all your accounts because your retirement money might be spread out across multiple accounts.
Make the necessary changes
Now that you have a concrete plan for retirement and you have assessed how much you have saved up to this point, it is time to make the necessary changes. This is an important part of the process as you prepare for retirement because these tweaks can mean the difference between hitting or missing your mark.
Making the changes can be anything from switching down from a risky investment into a much safer one to prioritize your capital. It is also possible that you choose to max out our 401k contributions every year. You might be doing this to help you make the most out of an employee-matching program in the office. This is already free money that you can take advantage of to grow your retirement fund.
Start working on your hobbies
As you start retirement planning, you might overlook the fact that your hobbies play an important part in the process. Your hobbies can be an excellent source of additional income when you retire. It is always better to turn it into an income positive hobby rather than lose money over it in retirement. You might notice it but your hobby can slowly weaken your fund over time.
If you are an excellent painter, you can start offering your services to family and friends early on. As you get into retirement, you put in more time for it. You might even be able to mount a solo exhibit and sell a lot of your works. This can get your name out there and you might start getting requests for commissioned artwork. Not only will this help you earn more money, but it can also make your retirement a lot of fun. US News does remind people to consult with a tax professional about income earned from hobbies even in retirement.
Make sure your debt obligations do not jump over into retirement
As you prepare for retirement and ensure that you have enough resources for your use in your golden years, you also need to make sure that your debt obligations are kept at bay. The idea is to ensure most of them, if not all, are 3paid off before your retirement. This is crucial especially if you start talking about huge financial obligations.
On top of this list is your mortgage loan where you need to make sure you pay it off before you retire. If not, a big chunk of your monthly retirement fund would only go to house payments. The same with a car loan and even student loans. You need to pay off these accounts prior to retiring or could start sacrificing basic monthly needs just to pay your lenders.
Transition slowly into a small house
One way most retirees save money is by making a drastic change in their housing situation. There is a tiny house movement among retirees which is a great way to prepare for retirement. If you want to give this a go, you need to start making improvements in your current home. This will help you improve not only the curb appeal but the resale value of your house.
As you do this, start identifying the house you want and even the location of your new home. This is not a walk in the park because you need to make sure that the new place has everything you need. From the supermarket to the bank and even the hospital, you need to make sure that you have everything you need to have a comfortable retirement.
Transferring to a smaller house is a bit tricky since you need to time it just right. You need to be moving out of the old house and into the new one smoothly, Otherwise, you might end up paying two mortgages for some time. This can take out a lot from your finances and do your retirement account more damage than good. Once you do move into a smaller home, the difference in selling the bigger house can go into your retirement account.
Begin a healthy physical routine
As you are nearing retirement, it is also a good idea to make sure you are making a conscious effort to focus on your health. It is a fact that health expenses tend to go up the older you get. In fact, the U.S. Department of Health and Human Services shared that about 70% of people over 65 years old would need long term care in the future.
If you start taking care of yourself early on, you can enjoy retirement more. You can start with a comprehensive general checkup to have an idea of what you need to work on. It is also a good idea to start engaging in physical activity that you love to do. Complement this with a healthy diet and you will see
It is an exciting journey once you see the importance of why you need to prepare for retirement and the possibilities of what forward planning can bring to your golden years. You just have to put in the work to make your retirement dream a possibility.