5 Crucial Steps in Planning for Retirement

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Retirement. The ultimate dream of never having to wake up and go to work again. Putting on your favorite pair of sweats and enjoying doing whatever you want for the day, without the worry of checking your email or having to answer an emergency call from your boss.

Let’s face it, everyone is working toward retirement. Regardless of whether you love or hate your jobs, the freedom to do whatever you want whenever you want is the perfect end goal.

With that amazing freedom comes a looming sense of fear. Fear of if you are ready to give up work – something that you’ve been doing for the last 30+ years. More importantly, fear of not being able to afford to live during retirement.

There are five easy steps to take to ensure that you can live the life you want during retirement and not have to worry about anything more than what you are going to do with all of your free time!

The Fives Steps to Planning for Retirement

 1. Start Early

Starting early doesn’t mean planning a few years before you retire. It means starting at the beginning of your career, or if you haven’t done that, it means starting right now. Investing in your company’s 401k, pension funds, or IRAs that are offered is essential to you being able to be financially stable when the time for retirement comes. Don’t know where to start? Companies like https://bogartwealth.com/ make it easy to get solid financial planning advice that will set you up for retirement, even if it is still twenty-some years away. It is never too early to start setting yourself up for financial success in retirement.

2. Include Income from ALL Sources

Naturally when you think of retirement, you think about collecting social security. That’s great and you will, but most of the time it takes a lot more than social security to live well after retirement. Checking into all of your accounts is essential in putting together a comprehensive income assessment. Look at all of those 401Ks you may have never rolled over after changing companies, IRAs that may be mature and able to be withdrawn, and CDs that are ready to be cashed out. All of these seemingly little, or maybe not-so-little, accounts can quickly add up when it comes to your retirement income plan. Even a small monthly pension can be a big deal when you are now living on a fixed income.

3. Evaluate Your Spending Habits

Knowing how you spend money is important in every walk of life, but it is especially important as you near retirement. You definitely don’t want to go toward a fixed income upside down! Doing a trial run a few years before retirement is a great way to judge exactly how much you will need and how you will spend it. Not only will it get you in the habit of spending only the amount you will receive once you stop working, it will also pad your savings account with the extra money so you will have more going into retirement. A trial run is a total win-win!

Additionally, now is the time to think about what you hope retirement looks like. If you want to travel the world, you are going to need a lot more saved than if you just plan to enjoy life at home.

4. Ditch the Debt

The easiest way to ensure you will be financially prepared for retirement is to go into retirement debt-free, or at least as debt-free as possible. Having small-balance credit cards is one thing, but big monthly expenses like car payments and mortgages can be taxing on only a fraction of the income you are used to. If you are able to get out from under those large expenses while you are still working, you will have a lot more freedom with your money to do the fun things you are looking forward to once you don’t have work to worry about.

5. Plan for Health Care Needs

One really important thing to think about is your health care plan. Some companies offer a retirement healthcare plan, which is great, but many don’t. Medicare is there for everyone, but do you need a supplemental plan? Or is a Medicare Replacement plan the best option for you?  Each option has a different set of costs. Do you want to pay more for more comprehensive coverage and less out of pocket expenses, or do you want a lower monthly payment with a higher out of pocket cost if something goes wrong. There is no blanket answer, it is totally dependent on your savings and what you deem to be most important. This is something you definitely want to think about and have a plan for before you leave you job and your current healthcare insurance situation.

If you follow these five steps, you will be so much better prepared to finally say goodbye to the lifetime career and say hello to a world of total freedom.