Are you already working? If you have something you are doing or you have been doing that fetches you money, then retirement is something you should look forward to. Nobody wants to continue this exhausting cycle of working days or for some people, working most days. Retirement is a time where we can sit back and actually enjoy what we worked so hard for over the years.
Planning your retirement is important because if you don’t properly plan it, you’ll realize that when you are finally retired, you’ll have literally nothing to fall back to. Do you want that? I’m sure you don’t and I don’t want that for you either. That’s why in this blog post, I’ll be introducing you to 5 key retirement steps you should employ if you want your retirement to be comfortable, secure, and fun.
5 key retirement steps you should implement
1. Have your retirement goals laid out
Before you start saving towards your retirement you should have your retirement goals laid out. What you want to achieve after you have worked so hard for years. Would prefer travelling with the income you’ll be receiving monthly or spending the money where you are. Will the money be able to cover your daily expenditure? These are some of the things you should think about when planning for your retirement.
2. Assess your current financial condition
Now you have a clear picture of what you want your retirement to look like, the next thing is to examine or review your current financial condition. Ask yourself the question “with the amount I’m earning now, will it be able to offer me the retirement of my dreams?” You should be practical with your answer because it’ll be able to determine if your goals will be achievable or not and it also helps in determining where your starting line lies.
Several other factors also affect your retirement planning. Factors like the kinds of debts you are currently dealing with (if any!), expenses management, and your investment savings. Your investment savings hold a lot of power because they’ll determine what you’ll end up with when you are finally retired.
3. Calculate your retirement needs
After determining what you’d want your retirement to look like and you have carefully assessed your current financial condition, the next step to take is to calculate your retirement cost. To do that, you’ll need a retirement calculator to help determine how much is safe for you to save monthly and it also shows you what you’ll end up with at retirement. This is really great because you’ll be able to properly arrange your goals to fit in your retirement budget.
Your retirement cost helps you determine whether or not you are on track and if you’ll need to make changes to your current condition in order to factor in the cost. You may have to save up about 60-80% of their pre-retirement income—the amount you’ll be saving depends on your retirement plans. If they are big, you’ll have to save more and vice versa.
4. Assess your assets and income sources
Now you know your retirement cost and retirement needs, you’ll have to determine if you have enough income sources to fund your retirement dreams. Since you are planning into the future, you’ll have to first assess your current sources of income as well as your assets and after carefully analyzing them, you should be able to predict what they’ll be at the time you retire. This covers your pension pots, personal savings, home equity, and investment portfolios.
5. Plan for the unforeseen
When planning for retirement, most people only focus on things that are guaranteed and fail to plan for the unforeseen. Unplanned or unforeseen expenditures (e.g., medical emergencies) can burn through your retirement savings. That’s why it’s important to have a contingency fund to cater to such expenditures.