Like or not, we will retire one day. But whether we are prepared financially for retirement? Most people are completely dependent on benefits (retirement benefits) is available to support the life after retirement.
How to prepare for retirement?
This question is often played in the mind when people discuss retirement issues. However, no specific answer to this question because it depends on your desired lifestyle, health and condition of a person after retirement. Here are some steps you can take to prepare yourself in terms of money before retirement:-
STEP 1: Set your financial needs
The first thing to do is assess your financial needs. After retiring, office expenses such as laundry, transportation / traveling to work, food and so no longer. However, other expenses, such as medical costs, insurance, and others may be increased. In general, the needs of a retiree’s expenses are estimated in the range of 75% to 80% of its requirements while still working.
Based on these requirements, you need to make appropriate adjustments to take into account your unique situation, such as children’s education costs and the payment of housing loans to estimate monthly expenses that need to be accommodated. In addition to regular expenses applied, you should also consider if there is a possibility that your lifestyle will change. If you wish to travel, vacation, or have other hobbies that involve money, you must consider these costs when planning for retirement.
Step 2: Value your current financial status
After setting up the financial requirements, the next step is to assess the current financial situation and make plans to meet future retirement needs. Here, you need to pay attention to the investment portfolio, which includes additional savings and your income. List also all financial commitments need to be clarified.
Step 3: Calculate the money needed
After collecting all the information above, you can seek advice from financial planners or any website which published articles on retirement planning that you can emulate in order to prepare themselves financially before retirement. This is important to assess whether your money or not enough to meet future retirement needs.
Step 4: Be Disciplined in Financial Planning
To maintain the purchasing power of your money, make it grow at least at the same rate as the rate of inflation to offset the negative effects of inflation. This is based on the assumption that you want to keep retirement savings for life and save the principal amount for your children. On the other hand, if you do not mind spending the money for your retirement, the amount of money required would smaller. However, at the same time, be careful in your financial planning. Avoid making arbitrary withdrawal and make sure it is adequate to cover expenses until the end of your life.
In addition, you may want to consider the effect of compounding because the earlier you begin retirement savings plan, the easier you achieve your financial goals set. After a set amount of money needed, the next step is to give full commitment to the amount to be saved and managing your investment portfolio in a proper manner. The closer to retirement age, the lower the risk to be taken. Therefore, try to avoid high risk just because you are now in the middle-aged and began to plan the necessary money. If you encounter this situation, consult a licensed professional. Finally, spend your money according to need and try to maximize your savings for retirement time.
So hurry? Start your retirement plans now!