Retirement is the time of life when a person chooses to permanently leave the workforce behind. Between 41 to 45 years old is the ideal age to retire early. It’s the optimum age when a person has earned a good sum and put in the dues, yet he or she still has enough energy to do something new or achieve his or her long time goals. But this is not the real picture because in the United States and most developed countries, the traditional retirement age is 65. What more to the countries in the third world?
Saving for retirement is a struggle now more than ever because of the effects of the current pandemic in the global economy. Imagine how lost jobs, reduced pay checks, limited earnings, aside from mortgages, higher energy and food costs, and local and state tax hikes have combined to make the goal even harder to reach.
According to Gallup, an American analytics and advisory company known for its public opinion polls conducted worldwide; insufficient retirement money is the number one financial worry among 66 percent of Americans.
In America, According to the Employee Benefits Research Institute, a nonpartisan, nonprofit research institute based in Washington, DC; that produces original research on savings, retirement, and economic security issues, 68 percent of adults have less than $1,000 in savings.
So, how do we really save for retirement so we don’t outlive our assets?
Let’s consider retirement as a second job and bear in mind the following strategies to help plan for a financially secure retirement.
First, make yourself debt-free before you retire.
To avoid unnecessary financial burdens, such as the increase in debts, take stock of the situation and create a plan to reduce debt as you approach retirement.
Many financial experts would recommend having your own home before a retirement. Holding a mortgage also means additional payment for utilities, maintenance, and insurances that come along with it. People with a free and clear home tend to sleep better than those who still had a mortgage after they retire.
To reduce your monthly mortgage payments, you may downsize to a smaller home; pay down mortgage principal and refinance the remaining portion.
Second, design your savings and spending plans well.
The implications of your choices which tend to magnify make retirement planning hard to achieve. To help you determine the amount of savings needed for your desired retiree lifestyle and to boost your confidence before retiring, you might need the help of a retirement calculator. This is a free app that estimates how much you will need to save each month to fully fund your retirement.
To help you determine if you have enough savings set aside, you just have to provide a few figures in the calculator such as your current age and the age you would like to retire, the amount you would like to withdraw monthly and the rate of return you expect to earn annually, the amount of your current savings and the number of years you would like to make the monthly withdrawals. After that, you just click “Calculate” to see the results that are provided in nominal and inflation-adjusted terms.
Third, consider thinking twice before leaving the workforce.
Retirement can look magical from a distance, but might later lead to regrets. So before quitting your job, try to reduce work hours first so you may still have the chance to return full-time, if needed.
Also, take into consideration the retiree benefits. If you don’t have them, it is recommend to delay your retirement until you qualify for Medicare.
Most of all, make sure to be fit and healthy before retirement. All of your savings and investments will be worthless if you have to spend your every penny to hospital bills and medical expenses.