Preparing and planning for a financially stress-free retirement is one of the most important things you can do to make sure you're ready for the transition. Not only are you helping yourself, but you're also being a good role model for your children, grandchildren, and others.
The consequences of not planning for retirement could include potentially sleepwalking through your retirement years, spending all your money in the first few years, and leaving your loved ones with nothing to inherit when you're gone.
If you want to enjoy a stress-free life in retirement, you need to put some thought into the financial aspects of your life in advance. Here are some of the few things you can do to improve your financial independence, so you can make the most of your golden years with little-to-no monetary problems.
Tip #1: Start Planning as Soon as You Start Working
As soon as you enter the workforce and start earning income, you should consider building assets that will offset any future liabilities you may incur. This is an especially important idea to keep in mind if you're the first in your family to begin working.
Of course, you don't need to save a lot and sacrifice your desires to build your wealth through the years. By setting aside something as little as $100 per month and investing in stocks, bonds, and mutual funds, you'll be well on your way to building a solid nest egg by the time you're ready to retire.
Tip #2: Identify Your Post-Retirement Goals and Make a Budget for It
After you've set aside a reasonable amount of money for your future, you have to think about what you'll be doing after you retire. Do you have children who you can help financially to support higher education or give them a head start in life? Do you want to travel a lot or stay closer to home and spend time with family?
There are many things to consider, and the more you know about the type of lifestyle you want to lead, the easier it will be to determine what type of retirement income you'll need to sustain that lifestyle.
Tip #3: Avoid Investing All Your Money in Stocks and Bonds
If you want to keep some of your savings liquid and easy to access, you can put some of it in cash equivalents like savings accounts and certificates of deposit. This way, you'll have some money on hand to help with unexpected emergencies and avoid dipping into your retirement accounts.
Tip #4: Save More than You Need, and Talk About it With Your Significant Other
You may feel that you're already saving enough money, but you'll never know what unexpected expenses will come up and bite you later in life. A good rule of thumb is to keep an emergency fund of around three to six months' worth of income in a liquid account.
Tip #5: Invest in a Roth
If you still have time to grow your wealth and if you're in a high tax bracket, consider investing some of your money in a Roth IRA. This is a special type of retirement account that allows you to contribute to it after paying taxes. The good thing about this is that the money you invest will be tax-free when you withdraw it in retirement.
The Bottom Line: Living Your Golden Years with Financial Freedom
If you want to live comfortably in retirement, you need to make sure you have enough money to sustain yourself. Consult a financial planner to determine how much you need to save in order to live comfortably in retirement, and make sure you are getting the maximum employer contribution on your retirement accounts.
How Can Swell Financial Planning Help You?
The team at Swell Financial Planning can help you figure out the best ways to get insurance to ensure you're financially secure. Whether you need to purchase a policy, get tips on how to save money, or get a financial plan, you can count on us to find you the right solutions.
If you're looking for a financial consultant in the Gold Coast, reach out to us today!