For many working Americans, the dream of someday retiring is what keeps us motivated and focused on careers. Working and planning to prepare for retirement takes a certain amount of discipline and insight. This will best prepare for that future stage of life. Unfortunately, saving for retirement is not always easy.
There are a number of reports that show a lack of preparation by American workers when it comes to their retirement and that many end up short of what they need to retire comfortably. The good news is, there is still plenty you can do that will make a significant difference. Here are 7 actions you can take to prepare for retirement:
Have a Plan and Stick to it
First and foremost, you must have a solid retirement plan in place. Not only should you be keenly aware of what this plan is, but you should also revisit the plan on a regular basis to ensure things are headed in the right direction. This includes tax planning, investments, and real estate.
Get Rid of Debt
Do what you can to downsize or completely eliminate debt as much as possible. This might include accelerating mortgage payments and paying cash for major purchases instead of using credit cards. When you reduce your existing debt and limit new debt, you are redirecting money spent on interest to retirement income.
Diversify for Growth
When it comes to investments, a well-balanced portfolio is essential to help you weather unexpected downturns and generate the income you will need to sustain you through retirement. It is wise to have a mix of stocks, bonds, mutual funds as well as other assets that is in harmony with your risk tolerance and time table.
Increase Retirement Contributions
If possible, focus on increasing the contributions you are making to your 401(k), IRA or other retirement plans you may have in place. Be sure to take advantage of matching contributions made by your employer and, if you are of age, make the extra contributions that are allowed for those who are 50 or older.
Consider Supplemental Health Insurance
Medicare is available for those who retire at the age of 65 or older, but in some instances, this will not be enough. You may want to take a look at additional insurance for expenses that Medicare won’t cover. Long-term care insurance and health savings accounts might be something to consider.
Calculate Retirement Expenses and Income
It never hurts to do some estimation about what money will be coming in and going out once you reach retirement. There are predictable sources of income such as Social Security and employer pensions that should be factored in with savings and investment accounts. Many experts say that to plan on using 4% every year of your retirement portfolio. Plan accordingly.
Plan Where You Will Live
The value of your home and the location you live in can play a significant role when it comes to planning for retirement. Are you planning on downsizing from a larger home to a smaller one? This can definitely make a difference not only in cutting costs, but also additional income.
Have questions or need help to prepare for retirement? Call Hacker Accounting for a consultation. 602-375-5251.