How to Plan Your Retirement in 4 Easy Steps
If you intend to secure a comfortable financial future for yourself and for your loved ones, you’ll have to spend more time on retirement planning in 10601 rather than on vacation planning.
Planning for your retirement doesn’t have to be an overwhelming experience. With the help of a qualified financial advisor to guide you through these four steps to achieving your financial goals for the future, you’ll do just fine.
What Are the Basic Steps to Retirement Planning?
Diversify and Invest for Growth
You may think that reducing risk by avoiding stocks is a smart move. However, keep in mind that the growth that stocks can potentially provide can be extremely important. For this reason, it’s best to maintain a balanced mix of stocks, mutual funds, bonds, and other assets after taking into account your investment time horizon, liquidity needs, and risk tolerance.
Determine Your Expenses
Did you know that the amount of money you need to save for your retirement is determined by your expenses instead of your income? To see a clear snapshot of your cash flow, it’s best to keep track of your fixed and variable expenses years before you plan to retire.
While you’re at it, be sure to take into account those expenses that can be eliminated by the time you reach your age of retirement. These include the deposits in your retirement plans such as an IRA. This should be deducted from your total yearly expenditure.
Estimate Your Likely Retirement Income
When you retire, your sources of predictable income include employer pensions and Social Security. Your wages, investment accounts, savings, and other sources of income earned in retirement will be the sources of the rest of your retirement funds. You’ll know that your assets can last for the rest of your life when you can afford to spend about 4% of your portfolio each year after you retire.
For example, if your retirement assets are worth $1 million, you can afford to spend around $40,000 of that amount annually in retirement. If you add this amount to your other savings, pensions, and Social Security, ask yourself if this is enough to support the kind of lifestyle you envision when you retire.
Don’t even think about ignoring your debt issues while you’re still earning. Be sure to manage your debts by calculating your obligations and coming up with ways to pay your debts off.
Think About Your Long-Term Retirement Housing Needs
Keep in mind that your housing needs can potentially change over the course of your retirement. For this reason, it’s extremely important to address your long-term housing needs before you retire. Decide whether you’d prefer to keep your current home for the rest of your life or relocate to save more money.
Plan for Health Care
Before your retirement begins, you should know how to obtain health care and have an estimate of its costs. Aside from determining the level of care that you can afford, you should also figure out where it will come from and how your health care will change once you become eligible for Medicare.
Learn More About Retirement Planning in 10601!
At 1879 Advisors, we want you to enjoy a happy and comfortable retired life. Contact us now to schedule an appointment with our team of financial experts!