How To Budget For Retirement
While almost everyone looks forward to retirement and enjoying the golden years without a daily trip to the office, very few people are actually well-prepared when it comes to how to budget for retirement. Retirement can be one of the most challenging times in life, because it's filled with a number of changes and often requires a brand-new outlook. Figuring out how to budget for retirement well in advance will make the transition easier, and give much needed piece of mind.
- Plan ahead. You know you're going to retire someday; chances are, you know this from the day you enter the workforce. It's never too early to think about how to budget for retirement, but if your retirement date is within five years, it's a little too late. Start planning your budget for retirement as far in advance as you're able. Life is unpredictable and things may come up along the way, but starting on your goals early makes you far more likely to succeed.
- Figure out how much money you need. Part of enjoying retirement is the security of knowing you have the means to do some of the things you may have put off earlier in life. Be realistic with your wants and needs, but figure out what type of lifestyle you'd like to live after retirement, and what type of income you need to support that goal. If there are things you've dreamt of doing or a goal you want to accomplish after your retirement, be sure to add those to the budget. Also, don't forget to leave a little extra room for the cost of inflation.
- Don't be afraid of change. One of the benefits of retirement is the freedom it offers, but along with that freedom often comes the need to make changes in both your lifestyle and your budget. Perhaps it's time to move into a smaller house or apartment, cash in long-standing investments, or choose a smaller, less flashy automobile. On the other hand, it might also be a good time to take that cruise to Australia or publish that manuscript that's been in a drawer. Putting together a budget for retirement isn't about depriving yourself about things, but it's a good time to re-evaluate which things mean the most to you.
- Make a long-term plan. Americans are living longer than ever before, and with the average age of retirement around 55, you should plan on a minimum of 25 years in retirement. That being said, you don't want to turn 100 with an empty bank account, so make sure whatever plan you develop is able to provide for you well past retirement age. It is always better to have too much put aside in your budget than not enough, but you don't want to make your retirement years more frugal than need be.
- Ask for help. Financial planners and banking professionals are there to help you budget for retirement, and to help you manage your money once you're no longer working. While it's wise for you to have a general idea of your budget and the financial goals you wish to achieve, and you should have a basic understanding of how any investments work, talking to financial professionals is a good way to gain solid advice.
For many, retirement is a time in life to start a brand-new chapter, to put yourself and your dreams first, and to give yourself the opportunity to do many of those things in life you've always wanted to do. Starting to budget for retirement early into your working life is the best choice you can make to ensure your financial stability throughout the entirety of your life, but even if you've waited a little too long, every little bit you can do is one step closer to being in control of your money and of your future.