It’s an interesting time to think about retirement with so much uncertainty in the world. At the same time, planning for the future is essential. If you don’t already have a savings plan, now is the perfect time to start thinking about how you’ll support yourself and your family during your golden years.
1. Diversify Your Portfolio
Building a retirement savings plan isn’t something that’s taught in most modern public schools. Many graduates emerge from these hallowed halls of learning with the mistaken understanding that a 401(k) is all they need to live a comfortable retirement. It is one piece of the puzzle, but it often isn’t enough to support an individual or couple throughout their entire retirement.Another solution to this problem is to diversify your investment portfolio. Investments are already risky due to the inherent volatility of the marketplace. Diversify by investing in various stocks, bonds, and other options like annuities, real estate, or specific sectors.
2. Follow the 4% Rule
Once you’ve reached retirement age, the question becomes how you’ll manage your money. It’s easy to splurge on what you’ve always wanted to do or places you’ve always wanted to go. A financial adviser named William Bengen offered an answer to this question—the 4 percent rule.3. Create a Retirement Budget
How confident are you that your savings will last long enough? A recent survey found that only 31 percent of adults are convinced they will have enough money to live comfortably through their retirement. Only 21 percent of baby boomers are confident that their savings will last.4. Understand How Medicare Works
Another essential tip to follow when ensuring that your retirement savings last throughout your golden years is understanding how Medicare works. Once you reach retirement age, you’ll need to sign up for Medicare Part A and Part B. Part A serves as your hospital insurance, while Part B is medical coverage. You generally only need to sign up for Parts A and B once.You have the option to change the way you receive your health coverage each year. You can choose Original Medicare or Medicare Advantage, also known as Medicare Part C. Original Medicare will also open opportunities to choose drug coverage, known as Part D, and other supplemental offerings.
5. Know When to Claim Social Security Benefits
The retirement age in the United States and worldwide keeps climbing. For decades, 65 was the goal, but in the next year or two, it will rise to 67. You’ve got the option to claim Social Security benefits starting at 62—a full five years before retirement—but that comes at a cost. You will never gain your full benefits if you opt to claim your benefits early.6. Treat Your Home as an Asset
Your home can be an important asset for retirement savings as any 401(k) or investment portfolio. Some people prefer to go into retirement debt-free, but you can also use your house and its value as a safety net. Consider opening up a home equity line of credit (HELOC). You can use it to borrow against your home’s value.Applying before you officially leave the workforce will make it easier to receive approval if you plan to go this route. You can still secure that line of credit after retirement, but it’s more complex than if you’re currently employed and have a steady income.
7. Have Enough Petty Cash for 6-12 Months of Expenses
Saving for retirement is something many people struggle with. A MoneyMangnify poll of more than 2,000 people found that nearly 60 percent of them believe they’ll never be able to save enough money to retire. Ultimately, you want to have enough varied income sources that you’ll have something else to take its place if one falls.Dividends and interest can provide some income, but it’s subject to the whims of the stock market. Your retirement fund may gain some money in interest, depending on the details of your investment, but it usually isn’t enough to offset any withdrawals you make over the years.
8. Stock up on Frequent Flier Miles and Reward Points
Did you travel much during the years you spent in the workforce? Things like frequent flier miles, reward points, and savings apps can help make things more comfortable during retirement. It can also make all those trips you have planned kinder to your wallet.Frequent flier miles and reward points don’t last forever. Learn how to make the most of them. Along the same lines, look into credit cards and lines of credit that offer cash back or reward points that you can use for other tasks or trips. Every little bit helps if you plan to spend much of your retirement traveling worldwide.
9. Monitor Your Account and Data Security
Everything is digital these days, from credit accounts to medical records. Your retirement funds and related data are also online. It makes managing your portfolio more convenient, but as with any connected system, it is vulnerable to hackers and data breaches.A data breach that involves your retirement funds can be costly. The good news is that your money is likely insured and will eventually be replaced. Still, if someone drains your account, you lose out on any interest or dividends you could be earning during that period. It could also put other parts of your digital footprint at risk.
10. Consider Other Variables
Your career and the size of your retirement fund aren’t the only things you need to consider when trying to ensure your savings last for the remainder of your life. There are other variables to consider. Are you married? If you’ve ever been married and have gone through a divorce, it could impact your funds or delay your plans.11. Hire a Professional
There are often a lot of rules and requirements to consider when dealing with a retirement fund. You can keep track of everything yourself, but sometimes the best thing you can do is hire a professional. Having a financial planner in your back pocket can make things easier.These professionals can counsel you on wealth management, guide your investments, and advise on fortifying or diversifying your investment portfolio. They can also help manage the taxes and fees of a retirement account.
12. Figure Out How You Want to Spend Retirement
Once all the paperwork is handled and you have a plan for how to fund your lifestyle once you leave the workforce, the fun can begin. You get to figure out how you want to spend your retirement. After 40+ years working for a living, you can do whatever you want—and whatever your careful planning and saving lets you afford.Make Your Retirement Savings Last
Saving enough for retirement is only part of the equation. Once you have a plan in place, you must ensure it can support you comfortably for the remainder of your life. Don’t cut corners when it comes to setting things up. Make sure you have plenty of savings and multiple forms of passive income, such as an investment portfolio or an annuity.From there, it’s crucial to have a clear idea of what you want to do with your retirement. Be smart about your spending, and a solid savings plan should easily support you comfortably for the rest of your life.