Are you nearing retirement age or starting to think about investing? There are a few crucial retirement steps that you should keep in mind. Preparing your finances and benefits now can help ensure a more secure future without stress and consumer debt.
4 Important Retirement Steps to Do Now
As you start planning for retirement, there are 4 steps that you should think through now. It can be helpful to have a plan going into retirement even if a few things change down the line. Between the election of benefits, investment planning, and debt reduction, there are a lot of decisions.
Some of these steps will ideally happen early in a person’s adult life, but it’s never too late to put your finances in order! The key is to have little to no debt and an achievable plan in place.
Debt doesn’t have to be a normal part of life. Credit cards, mortgages and car loans may seem commonplace, but don’t get suckered into thinking debt in all forms is normal. Paying for purchases in cash, even considerable ones, is a very secure way to approach spending. While it’s not necessary to avoid all debt, consider saving more money towards major purchases before taking out any loans.
It’s important to actively eliminate debt from your portfolio since debt ties up your money and keeps you from saving and investing. The less debt you carry, the more you will have to prepare for retirement.
Create an Emergency Savings
Another important retirement step is to build emergency savings. Sometimes cars break down, jobs are lost or you may experience a major medical emergency. Being prepared for these events can help avoid credit card debt. Then you can keep investing and saving for retirement.
Experts recommend 3-6 months of emergency savings to cover bills and essential living expenses. Don’t let this scare you away; save little by little to reach your savings goal. This account should be accessible but not too accessible. Consider an online bank with high-interest rates for a savings account.
Do the Math & Project Your Retirement Needs
As you work on eliminating debt and building emergency savings, do the math on your retirement needs. If you hope to retirement the way you want, you need to have a retirement plan. Here are a few things to consider:
- Lifestyle- comfy and casual or globetrotting?
- Inheritance for the kids?
- Any expected costly medical needs?
- Have you started investing yet?
- When do you want to retire?
These retirement steps are an introduction to retirement planning. Use resources around you, like your HR rep, retirement calculators or a financial adviser, to make the most of your retirement savings.