There are millions of people that work each day and retirement is the furthest thing from their mind. Many people think they will have time to play catch up with their retirement savings later in life and it’s something they don’t take seriously. It’s this mentality that has led to thousands of eligible retirees having to work past the traditional retirement age.
Retirement income is something that millions of people don’t think about. People like to think they won’t have to worry about an income because their Social Security benefits alone will be enough to meet their daily needs when that time comes. But that is faulty logic. There are questions of everyone being able to receive their Social Security benefits and with the cost of living constantly increasing, millions are wondering if that income will be enough.
What most people don’t realize is that retirement is a life changing event. This doesn’t just mean a person no longer has to go to work. Retirement means that people are able to do the things they have dreamed of but they don’t have the same income they had before. Retirees still have a lifestyle to maintain without the income they once had.
The Retirement Plan
As people think of retirement planning conflicting thoughts and feelings happen. Some people avoid retirement planning because they don’t understand it and are overwhelmed at the options they have. There are others that don’t see it as something they can do at this point in their life and ignore it. Retirement planning isn’t something that has to be overwhelming. Retirement planning should be done as soon as possible. The sooner one starts planning for retirement, the sooner one can retire comfortably.
One of the first things people can do when planning for retirement is to picture it. Retirement looks different for everyone and everyone has a right to do what they want and can afford when they retire. Instead of being stuck in a lifestyle that isn’t wanted during retirement, savvy planners will sit and think of what their retirement looks like.
With a picture of what retirement looks like, planners can calculate what it takes to live that ideal life. That is something that millions are afraid to do. Retirement doesn’t have to be expensive but it doesn’t mean that retirees have to live in the poor house either.
To get a good idea of what is necessary for retirement, people should do the following.
1. Write down net pay per month (how much money is brought home after taxes each month).
2. What expenses are paid each month?
b. Car note
c. Car insurance
d. Cost of food
g. Credit card debts
3. What retirement dreams will be paid for?
a. Everyone wants to do certain things when they retire. Consider those things and build a budget for those things based on what they cost now.
4. What are the retirement savings goals?
a. Millions of people forget that even in retirement, things happen. Even retirees have to have money to spend on major repairs (replacing the roof, medical emergencies, car motors being replaced, etc.). Retirees should have money saved for those emergencies as well.
5. What expenses will go away with retirement?
6. Estimate taxes to be paid on retirement income.
This seems like a lot to do but it’s the most honest way of looking at retirement based on a person’s current living situation and lifestyle. This is something that has to be done to start saving honestly for retirement.
Once everyone has an honest idea of what they will need each year for their retirement, it’s time to save and put those numbers in the bank. It seems impossible to some that they will be able to save that incredible amount of money. It’s possible.
There are financial tools available for people to use when it comes to retirement planning. It’s time to use those tools. 401K plans and other retirement plans available through employers should be used as soon as possible. Opening separate retirement savings accounts can be useful for those that want to save more. Instead of being intimidated by what is necessary for retirement, it’s time for people to start planning accordingly so they can live comfortably in their retirement age.