The United States Department of Labor reports that the average American spends 20 years in retirement. Yet, few Americans are financially or logistically prepared for retirement.
Even if retirement seems far off, it’s never too early to begin planning for your post-career life. Naturally, planning for the long term takes time, and each person’s retirement needs vary. However, the following tips apply to anyone who doesn’t want to work for the rest of their lives.
1. Get your finances in order
Although the average American may be retired for 20 years, with advances in modern medicine, you may live much longer than you ever anticipated – and you don’t want to deplete your savings during this time. The earlier you begin saving money in an interest-accruing account, the better off you’ll be when you retire. One of the most efficient ways to do this is by signing up for your employer’s 401(k) plan. The benefits of doing so are much more immediate than you might think, since you’ll receive tax deductions from that point forward and tax-deferred growth on all of your savings. In some cases, your employer might even match your contribution each pay period. Starting an Individual Retirement Account could also help defer taxes on your savings, while maximizing profit as much as possible.
Many people incorrectly assume that Social Security will provide adequate income during retirement, but at the moment, the future of Social Security benefits remains uncertain.
2. Protect yourself
Medicare won’t kick in immediately once you retire, so you might need to invest in short term medical insurance during the interim. Find out exactly when your employer’s plan will cut off and when your Medicare plan will kick in, so you can determine the best short term insurance coverage option during this time.
3. Create a general itinerary
Of course, no one has the time or the energy to create a step-by-step itinerary of everything they’ll do after retiring. Still, you should have a general idea of what you want to accomplish during your time off. Creating a general itinerary would give you the opportunity to outline everything you have on your bucket list, from writing a novel to learning a new language to traveling the world. Although you’re supposed to relax during your retirement, maintaining some type of schedule and working toward goals will ensure you don’t become bored and will make post-retirement depression less likely.
4. Determine the best housing option
Chances are, the home you raised your family in isn’t the best-suited home for your retirement. You won’t be able to call upon the kids to help with yard work and housework, and you probably don’t want to worry about problems like a leaky roof or busted pipe. An apartment or condo would be a good choice for limiting your responsibilities, while still providing a comfortable living space. Moving to a smaller, single-story home could also be an effective way to save money on retirement costs with lower rent, utilities and general maintenance costs.
Planning for retirement isn’t easy. In fact, the complexity of planning is what inspires most people to start almost the moment they graduate from college. Although the prospect might seem a little stressful and intimidating, it’s all an investment in ultimately not having to work in the future. If you think of it that way, the work you put in now will end up paying off once retirement finally does roll around.
Originally posted on February 11, 2013 @ 1:51 am