For many people in employment, retirement means getting to enjoy a comfortable lifestyle, traveling, having time for friends and families, and partaking in various recreational activities. However, most Americans worry about having enough to last them for the rest of their lives, considering that they will no longer be working. That’s why it is important to be aware of different ways you can increase your retirement savings.
According to the Employee Benefit Research Institute, 26 percent of the working population has not saved for retirement, while 54 percent have less than 25,000 dollars in their retirement savings. These figures exemplify just how many people risk a financial downturn in their later years.
Having a viable financial plan is key to securing your retirement. Here are a few ideas on how you can ensure you are financially safe after employment and will have enough in your retirement savings.
Determine how much you need for retirement
The first thing you should do while planning for retirement is analyzing your finances and assessing how much money you will require for your fundamental needs. This will help you begin the right path toward your retirement savings. Here, you should take note of your fixed expenses, such as a mortgage, food, and medical care. Equally important is to consider how much you use on discretionary expenditure, for example, vacations and gifts.
With the knowledge of how you use your money, you are better placed to make a more precise retirement budget. What is more, you are sure to spend less on things you do not need so you can save for the future.
Have an emergency funding account
Having an emergency fund is a crucial component of retirement savings. One of the reasons many people find themselves in a financial crisis is because they do not plan for emergencies. As such, in the event that an unforeseen incident happens, they end up using the little they had saved for retirement. This ends up derailing their plan, and accordingly, making it difficult to have decent savings by the time they retire.
Saving for emergencies is critical in being financially secure by the time you retire. Focus on having a minimum of three months in saving, and earmark the monies for things such as car repairs and medical emergencies. With a viable plan, you will never have to use your retirement savings prematurely.
Assess your health insurance options
Considering that medical care accounts for a significant amount of your earnings, you cannot downplay the importance of having a medical insurance cover. In any case, as you age, you become more vulnerable to medical conditions whose treatment can affect your finances adversely.
To be on the safer side, consider having enough coverage; for instance, you can supplement your Medicare since it only covers half of your medical bills. More importantly, observe a healthy lifestyle to avoid being a victim of chronic conditions later in your life. Your retirement savings will thank you.
Investing can be a great way to boost your retirement savings. Rather than keep your money lying around, you can opt to invest in a project that gives you guaranteed income. There are several investment plans you can consider (including exchange-traded funds, stocks and bonds, mutual funds, etc.), but of course, with the help of a financial adviser.
While thinking of what to invest in, remember diversity is important; think of multiple ideas and see how you can dedicate some money to them. Investing in good ideas can go a long way in maximizing your finances.
Consider the right time for social security fund
The time you decide to apply for social security funds can have a significant impact on the money you receive; for example, taking it at 62 years means that your benefits are 25 percent less than they would if you took it at retirement. This would also affect you later in your retirement since adjustments in the cost of living are bound to occur.
The best time to apply for social security is after retirement, say at the age of 72, because the compensation is higher. Therefore, if you do not need the extra money until later into your retirement, you can wait to enjoy the full benefits thereof.
Having a financial retirement plan is a guaranteed way of ensuring that you and your loved ones are financially safe after you are no longer employed. The tips mentioned above will greatly help you to develop a tangible strategy that can see you enjoy life in your old age.