There are times when we feel that the circumstances and events happening around us are compromising our ability to control our lives. It might seem difficult to keep everything in check at all times, but as you approach retirement it becomes more imperative to take control of your life.
You want to spend your golden years on your own terms, and you can indeed, even if some things are out of your control.
For almost all retirees, their concerns lie in their health, finances, and mental and emotional wellbeing, which are not much different than the concerns you have when you’re working. Controlling how your retirement will go starts well before retirement.
Here are 4 effective ways to plan for your retirement.
Start Saving Early On
When you start saving from an early time, you will find a high balance in your retirement plan. While it’s usually advised to save 10% of your income into your retirement plan, there’s nothing that says you can’t save more than that.
When you think about it, if there’s anything you have a lot of control over, it’s your savings. It’s up to you how much to save and when to start saving. As an employee, you will have had several raises and bonuses earned over the years. People who enjoy their retirement, make use of raises by saving them.
It might not occur to you at the time, but staying employed with the same company for a long time or even all your working life will pay off at the end and help create your financial success. When you jump around from company to company for a prolonged period, you might only receive a fraction of the benefits you would have received when you stay with the same company.
The best-prepared retirees continue to have a steady source of income. This source could be from working part-time, or better yet, it could come from investing. Some of the best investments during retirement could be real estate, bonds, or retirement income funds, and self-directed IRA (SDIRA).
This is an individual retirement account that gives you more diversification in what you want to invest in, be it real estate, gold, or even LLC (Limited Liability Company). An experienced investment company will ensure that your money is invested in a diversified portfolio. This differs from regular IRAs, which limit you to certain types and numbers of investment.
It’s crucial that as you get older to make safe investments. In case an investment falls through, you are not at the age to easily bounce back and make up for lost investment money.
Pay Off Mortgage
Another key similarity of prepared retirees is that they have paid off their mortgage and have become homeowners. Mortgage payments take a big chunk of money, whether it’s from savings or salary.
The earlier you can pay off your mortgage, the more money you will save. The longer you keep your mortgage, the more interest you are paying for it. You can do yourself a favor when you pay it off early, resulting in less stress on you every month to pay off the lender.
By retirement age, you would want more freedom and not be tied down to a mortgage. You might decide you want to downsize or move to another state or another country, for that matter. However, it depends a lot on your circumstances. For instance, if the interest rate isn’t very high on your mortgage, it might make better financial sense to just wait and finish the payments.
This piece of advice might irrelevant, but it’s directly correlated with your retirement. There are always valid reasons for divorce and it’s not a decision that anyone has a right to interfere with. However, for financial reasons and other reasons, it might not be your best move.
A study carried out by the Ohio State Center for Human Resource Research showed that divorce reduces your wealth by a whopping 77%. You increase your wealth by 4% for every year you remain married if all other variables remain constant.
Marriage also spurs other financial benefits in social security checks as you are entitled to receive spousal benefits. As a married couple, you will also receive income tax advantages. Also, if your wealth is high enough to pay an estate tax, you will not have to pay upon inheritance.
Retirement never creeps upon us by surprise; we have plenty of time to prepare for it. Some things will be out of your control, that’s true to many things in life, but you can control many aspects of your retirement by planning. You can take several measures early on and during retirement to live a comfortable, happy, and stable life.