The global COVID-19 pandemic has shown us how important it is to manage our finances. At any given time, companies can shut down at a moment’s notice and we may lose our source of income. Adults who are in the stages of planning for their retirement should be aware of the importance of setting targets when it comes to building their retirement income. This may seem like a challenging feat but with the right mindset, commitment and some discipline, you can prepare for your retirement by taking specific steps,. There is no such thing as starting too early when you are planning your retirement income to provide yourself with financial security.
Assessing Your Current Financial Situation
Assessing your current financial situation is perhaps the most difficult step you’ll need to take that involves reflection and analysis. Take a close look at your finances. Do you have enough savings to last you during your retirement years? What are the items you are spending on the most? Are these items your needs or wants? Are you willing to downsize your lifestyle in order to discipline your spending habits?
For empty nesters who live in relatively large and expensive properties, they might prefer to get a smaller home after their children have moved out. By selling their properties and getting smaller places to live in, they can contribute significantly to their retirement funds. One can considerably save on utilities, upkeep and maintenance costs in the long run.
Building Your Savings
If you plan to retire comfortably and fully enjoy your golden years with peace of mind, building your savings is the next thing you’ll need to do. After assessing your financial state, consider this statistic from the Department of Labor: retirees need 70 to 80 percent of their pre-retirement income in order to cover their expenses during their retirement years. As such, saving 10 to 20 percent of your income each week or month is a sensible step to take in the planning of your retirement income.
Setting Budgets and Paying Off Debts
During your retirement, you will be living on a fixed income. This is where budgeting comes into play. Start tracking where your money goes and managing your personal cash flow so you can be better prepared for unexpected expenses like medical costs and emergencies. In addition, before your retirement, you should also pay off your credit card debts in order to have better control over your savings. By lowering the amount of debt you have, the monthly interest accrued on your card will also decrease.
Examining Investment Options and Other Sources of Income
For those who have already accumulated a respectable amount of savings, this may be the time to consider investing in programs that can grow your money. On the other hand, if you are not confident about investing your nest egg, you can always look for part-time work or freelance projects to generate a side income during your retirement. This is actually a great way to supplement your fixed income while keeping you connected to the community.
Planning your retirement income can be a complicated process. But this process need not be a source of stress and anxiety for you or your loved ones. With the right support system and trustworthy information, you and your loved ones will be able to transition to retirement with your finances in place.
