Plan For Retirement Now

Do you have enough money to retire on?

Almost half the retiring population is worried about money. Are you?


I’m Not Ready!


Only eleven percent of baby boomers, (those born between 1946 and 1964) are strongly convinced they’ll be able to retire and live in comfort—this according to an AP-LifeGoesStrong poll.  Further, almost 44% “are not confident that they’ll have enough money to live comfortably in retirement.”  With our economic times feeling so uncertain, what steps can you take now to improve your odds for financial security?


The Dirty Dozen


Here are 12 items to consider as you plan for the years ahead:


(1) Get out of debt now. Before you consider retiring, do whatever you can to get out of debt.  If you have credit card debt, cut back on everything else and pay it off.  Credit card interest rates are high and paying interest is a huge waste of the money you’ll need just paying for basics like food, utilities and housing.  Hopefully, you’ve already paid your credit cards off and your home mortgage is all you have to contend with.  If you have an adjustable rate mortgage on your home and you plan to stay in it beyond the term of the loan, consider refinancing to get a fixed rate to lock in your payment and protect against inflation.  However, if you don’t intend to stay in your home for at least 5 years, a refinance is not likely to be worth it as you won’t have time to recover the added loan fees.  For more help getting out of debt, read this post: Debt Relief: Two Solutions That Work


(2) Watch those investments. If you’re comfortable handling your own investments as you save for retirement, that’s great.  However, comfortable or not, it still may be worth your time to pick the brain of people who spend the majority of their time working with issues of aging, estate planning and retirement investment strategies.  That’s what good financial planners do.  If you don’t have a planner there’s no time like the present to get one—and you don’t have to wait until you’re thinking about retirement, either.  In fact, those who who start early will have a much better chance to turn their retirement dreams into reality.  A planner will be able to explain the various types of investments and suggest strategies for changing the allocation of your portfolio as you age.  For example, holding an aggressive stock portfolio may be a terrific strategy for a young investor with time to make up for potential losses, but as a person nears retirement they will want less risky investments.  This means they may want to sell some of their stocks and replace them with investments like bonds, cd’s or annuities as much as 5 to 10 years before retiring.  For more ideas on retirement investing strategies check around for an estate planning workshop in your area, and for other ideas on investing in general see the following posts, What Kind Of Investing Is Best, A Key Secret To Winning As An Investor, The Lazy Investor, and Diversification: A Safe Money Machine.


Are your investments allocated correctly?

Don’t wait. Start your retirement planning today.


(3) Make the most of your 401K. If you’re still at work and your employer offers a 401K, be sure to take full advantage of it.  Employer matching can really add up when it comes to retirement savings.  Plus, if you’re over 50, the government allows you to make “catch up” contributions to beef up your retirement fund.  For more information on 401K’s see our Great Savings Tip #76 – Invest In A 401K.


(4) Practice living on less.  If you’ve zeroed in on a retirement date one of the things you can do is practice living on less.  For most of us, retirement means getting by on less income so weaning yourself off certain spending habits before you retire can make the transition easier.  One possible place to save: How about the family car?  Though two cars might be necessary when you work, one car may be more than adequate for retirement.  You can literally save thousands on insurance, maintenance and gas alone.  Or if selling a car is out of the question, do what you can to reduce the cost of living in other areas.  For a hundred ways to save see our Great Savings Tip series.



(5) Consider downsizing early on. One issue to consider as you grow older is housing.  While you’re still in your 50’s and early 60’s it’s still relatively easy to move.  That gets harder as you age.  Even with the best intentions, it’s almost like people over 65 hit some kind of internal switch and become stubbornly entrenched.  This makes downsizing earlier rather than later the best strategy.  Can you sell your larger home and move into a smaller apartment or condo?  Will doing that free up cash you may need in retirement?  A smaller home is easier to care for and that becomes more and more important over the years.  Plus, a smaller home payment can be a huge benefit when it comes to stretching your retirement income,  For more information on moving, see our Great Savings Tip #94 – Moving.


(6) Reduce clutter. And while we’re talking about downsizing, what about all that stuff you’ve managed to accumulate over the years?  Many people have great intentions for getting rid of their excess or unneeded possessions.  However, time has a way of zipping right by us.  Before you know it, your own inaction can become a prime source of stress and anxiety for your kids who are left to handle all the details you might have taken care of when you were still able.  For 14 ideas on holding a successful garage sale see our Great Savings Tip #83 – Hold A Garage Sale.



(7) Prepare your living space. It can really pay to prepare your living space to make it easier to get around.  For example, if you have narrow spaces between furniture, it’s a good idea to sell or give away some of it to make your rooms easier to navigate. Another idea: Put up grab bars in the shower and anywhere else you may need to use your arms getting up (like off the toilet).  Have outdoor stairs?  Consider putting in a wheelchair accessible ramp.  Is your master bedroom upstairs?  Consider creating a master suite downstairs if it will work in your home.  Using lots of energy?  Have a big power bill?  Make your home more energy efficient since energy costs are bound to go up faster than your retirement income.  For some great ideas on saving energy see our Great Savings Tip #100 – Go Green.


(8) Put your affairs in order. While dying isn’t a topic most people like to contemplate, it’s never too early to put your affairs in order.  At a minimum, anyone old enough to own real property or who has significant assets should have a Will, a Durable Power of Attorney and a Living Will in force.  A basic will is fairly easy to draft yourself if you purchase software to help with it. One option for the do-it-yourself folks is Quicken Willmaker.  However, if you aren’t comfortable doing it yourself, or if your estate is complicated, it can easily pay to let an attorney handle it.  In addition to a will, you can save your family a lot of trouble by making cremation or burial plans ahead of time.  See our Great Savings Tip #88 – Think Cremation Over Burial for other ideas.


(9) Cut off the kids. You may still be supporting your full-grown children financially, but unless your savings are in great shape, it could be time to cut off them off.  If you’ve been providing regular assistance, let them know it no longer makes sense to be giving away money—money you’ll need for your own economic survival.  Explain that it will be far better to pay your own way, and that means you’ll need to cut back where you can.


Retiring impacts more than money alone.

What do you see yourself doing in retirement? Maybe you should consider starting sooner.


(10) Join a group.  At your job you’re around people everyday.  When you retire, you’ll be saying good bye to most of them.  As such, it’s important to do what you can to prepare for this sudden shift in the level of social interaction.  While it’s true that as a person quits work, the first tendency is to want to sit back and take it easy, it’s also true that staying active is critical for long-term health.  To be sure you remain engaged, join a class or group that involves socializing. You can do this prior to retiring, too.  That will help make the transition from job to retirement feel easier.


(11) Exercise. The need for exercise doesn’t go away as you retire.  In fact, studies show exercise creates physical changes in your body that help prevent some of the effects of aging (for more info see this Washington Post article).  To stay or to get in shape, it helps when exercise is convenient.  That means it may make sense to buy an elliptical trainer or stationary bike for your home, or to sign up for membership at a nearby gym.  It may also make sense to find a class of like-minded seniors who get together regularly to stay in shape.  Check your local YMCA or Senior Center for available programs in your area.


(12) Get Long Term Care Insurance.  Even as you think to retire, you’ll want to check into Long-Term Care insurance, since few companies will extend the coverage you may have at work.  The cost for this insurance and its availability will depend on your age and health.  For more information on this topic, see our post How Would You Pay For A Nursing Home.


If you enjoyed this article you may also want to read:
The Life Timeline: Planning For A Brighter Future

Cut Your Mortgage Down To Size


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