As your working days begin to wind down, you may be feeling a mix of emotions about retirement. Along with the excitement you are experiencing, you are probably somewhat nervous about planning the day-to-day financial details of this new chapter in your life. It was recently reported that a proper income for retirement is approximately 70% of what you were earning in your working life. If you’re unsure of where you stand in relation to this figure, you may be left with questions. Have you properly prepared for being out of work? Will you face any unexpected expense? Will you need to take on a part-time job at some point? These are the kinds of questions that, if they are currently unanswered, can keep you awake at night pondering the answers.
Thankfully, you have the ability to quickly uncover the answer to questions like the ones above. If you are just starting to plan out your budget for retirement, learn more about the three things you need to consider as you establish your plans.
Evaluate Your Spending Habits
Take note of your recent spending habits. Are you happy with how you’ve been managing your income as of late? Are you spending more than you should on luxuries, for instance regularly taking nice vacations or dining out? It is important to compare where your spending habits are now with where you want them to be during retirement. Keep in mind that the average life expectancy in the United States (among men and women combined) is 78.74 years of age. If your current spending would drain your funds within a matter of years, it’s time to make some changes. It is only after you’ve evaluated your spending habits that you can make the necessary modifications to live within your means during retirement.
Understand Your Retirement Savings
Do you fully understand your retirement savings rules and regulations? If not, now is the time to get educated. In a 2013 survey, almost half of all individuals reported that they did not know if they were making good retirement investment decisions. If you are in the same category, take time to learn about your investments. Also, find out about any fees associated with your retirement funds, how much you can withdraw at a time from your savings, and what can cause you to incur penalties. Having a proper grasp of your retirement savings will ensure that there are no negative surprises down the road.
Create a Solid Budget
Once you’ve evaluated your current spending habits and learned as much as possible about your retirement funds, it is time to create your budget. Making a budget for retirement sounds like a daunting task, but if you take the time to organize your financial information, it can be a smooth task. As mentioned earlier, you should find that your budget provides approximately 70% of what you were earning in your working life. Without a solid written plan, you will have no way of knowing what you will be allowed to spend on a weekly basis, what you can allocate for emergency expenses, or even if you have enough to cover expenses for the rest of your life. Eliminate your current worries by taking the time to make your retirement budget now.
Get ready to enjoy retirement
Although there is significant financial planning that comes before retirement, the benefits experienced in retirement are worth all of the effort. As you work through getting your finances in order, don’t forget to keep your goals in mind and enjoy the journey.