You’re 65 years old. You’ve given all you can to the workforce. It’s time for you to pack all of your things in an RV and spend your golden years traveling around the world.
You would like to do that, but you never started saving for retirement. You only have a small handful of savings, which isn’t going to pay your bills on into your golden years. Now you’re faced with having to continue working despite your age.
With careful retirement financial planning, you can avoid this unfortunate scenario. Check out this money savings guide to learn how to get started.
How Much Should You Save for Retirement?
So, first thing’s first, how much do you need to save up to be able to retire comfortably? In the past, this answer was about a million. In recent years, it’s gone up to around 2 million as the average cost of living is a lot higher.
Keep in mind that this amount can fluctuate depending on what your retirement goals are. The price of spending your golden years traveling around in an RV will be a lot different than chilling in your house.
Setting Your Goals
Setting a plan for retirement won’t only give you a better look at how much you need to save. It will also give you a little bit of motivation when you feel like dipping into your savings for a fast-food pizza.
There are a million and one ways you can spend your retirement. You could travel around the world, go fishing every single weekend, or take the time to be with your grandkids.
Whatever you plan on doing, go ahead and get a good picture of it in your head. Once you do that, it will be easier for you to make your dreams a reality.
What Should You Factor into Your Savings?
Sadly, just because you stopped working, doesn’t mean your bills are going to stop. You’ll need money to pay for your mortgage and utility bills. There’s also the little factor of house maintenance.
You don’t want to get caught off guard if a pipe in your home bursts or a crucial appliance breaks. Medical emergencies tend to pop up without warning as you get older as well.
When Should You Start Saving?
The answer is today. The sooner you start the retirement planning process, the sooner you’ll be able to stop working and start enjoying your golden years.
The basic rule of thumb is to not wait until after your 20s to begin saving. That being said, if you haven’t started saving quite yet, it’s not the end of the world. You still have time if you start investing your dollars right now.
How Do You Start Saving?
So, you now know that you need to start saving, but how do you do that? Little amounts can stack up into large amounts. Even if you can only put 20 dollars into the pot, that’s 20 dollars you didn’t have before.
If your job offers a 401K plan, you should think about opting into it. If all else fails, you can also seek out a financial advisor that specializes in 401k rollover’s into IRA’s.
You can also create a separate savings account and set up automatic transfers. It’s always a good idea to be debt-free before entering retirement as well.
The problem that most people have with saving for retirement is that they forget. If you’re one of these people, you should think about getting automatic transfers set up.
It’s a service that pretty much any bank offers. It takes a little bit of money out of your account at the same time each month and feeds it to your retirement account.
Create a Separate Account
It’s helpful to have some type of emergency fund active. If you don’t, you’ll have no choice but to pull from your retirement fund every time something happens.
You should keep at least three months of salary built up in your savings account at a time. This way, you have plenty of cash to play around with when worst comes to worst.
Pay Your Debts
You don’t want to have to worry about owing money to people when you’re trying to relax with your retirement fund. It will also be hard for you to live off of what money you have if you’re still flinging cash at old debts.
This means that by the time you’re 65 you should have all your debts cleared. We’re talking student loans, credit cards, car loans, all of them.
What’s the Best Age for Retirement?
There is no right or wrong answer to this. We will say that you may need to apply for social security to be able to live comfortably in retirement and you won’t be able to do that until you turn 62. Your social security benefits may even go up if you wait until you’re 70 to apply.
Still, if you want to retire at the age of 60 and you have the means to do so, go for it. It might be easier for you to ease yourself into retirement so you don’t go stir crazy. Take fewer and fewer hours until you’re not working at all anymore.
Your Retirement Financial Planning Guide
Once you reach the age of 65, it will be time for you to remove yourself from the workforce, so you can spend the rest of your days in peace. The problem is saving enough money so you can do this effectively.
You’ll need to begin the retirement financial planning process while you’re still in your 20s or you’ll have nothing to work with when you’re older. Check out the finances section of our blog for more advice on how to save.