When people start their career, they often don’t realize the need for long-term financial planning. Down the road, this means that they have almost zero savings for their retirement. According to the Center for Financial Services Innovation, 42% of adults have no retirement savings.
Retiring without a proper plan means that even after working hard your whole life, you won’t be able to enjoy your life the way you want to. This is why you should have a good retirement plan in place – that vacation to the Caribbean you’ve promised yourself after retirement, won’t pay for itself you know.
The best way to ensure that you can live a good life after retirement is by controlling your expenses and paying off any loans or debt.
Even if you are in a tight financial situation, you can still budget your expenses for a better future.
How To Prepare Your Finances For Retirement
According to the Federal Reserve Report on the Economic Well-Being of Households, only 2 in 5 non-retired adults think they are on the right savings track – while one-fourth of adults have no retirement savings at all! These stats highlight how many people don’t realize the need for financial planning, or they may not have the right guidance.
There are ways of getting your finances in the right order, even if you’re in your 40s or 50s. Here are all the things you can do:
Develop A “B” word, Budget
First things first, budgeting is extremely important. Spending can go out of hand if you do not plan your expenses. Prioritize things that you need over things you can live without.
This doesn’t necessarily mean that you have to deprive yourself of other things – the first step is to figure out your monthly fixed expenses, and cut down on your luxuries. You can put any amount that you have saved, towards your retirement plan.
If this seems like a difficult task to do on your own, you can consult a retirement planner for budgeting advice and plans.
Get Rid Of Debt
Heading into retirement with debt on you is certainly not an ideal situation – start thinking about how you can pay off your loans and cards right now!
If you’re making more than your expenses, then try to split money between paying off your debt and saving for retirement – fix a percentage for both. For example, you can save 10% of your income for retirement, and 20% for paying off any debt. Just be sure that you have enough money left over for any emergencies.
Save More As You Earn More
When you get a raise or switch to a new job with higher pay, don’t start spending more. Instead, increase the percentage you are saving for retirement. Use it to make a big leap on your retirement goal, rather than spending it on things you don’t necessarily need.
Delay Social Security
If you retire without any savings, your only source of income will be from social security. This means that if you delay your retirement, you can benefit from the increased amount you will earn in the near future.
For instance, if you retire at the age of 62, you will receive less amount of money than someone retiring at 70. This is why it’s a good idea to push your retirement a few years back – imagine all the extra money you can save!
This step is so important we want to maximize your social security benefits with our Social Security Analysis!
Know Your Credit Score
This will work as the starting point of your fund saving journey, and better financial planning. Maintaining a good credit score will help you take better financial decisions, and control your budget.
Make A Sensible Move
Instead of beating yourself up for starting late, consider that it’s now important to invest your money wisely for long term financial stability. Make sensible decisions about your assets and debt – don’t think that selling your house is the only way to pay off your debt!
This is why it’s a good idea to let a financial advisor look into your expenses, savings and debt – you’ll be sure to get great advice on how to plan for your future.
Even if you don’t have a retirement plan in place right now, it’s never too late to start planning for your future. Managing your finances is key to building a healthy retirement fund – and with professional guidance, you can effectively organize your expenses and savings.