Increasingly, older Americans are choosing to “retire” in more active and engaging ways. You may dream of working part-time, becoming self-employed, volunteering in your community, or traveling while working remotely.
Whether you’re ready to exit a high-pressure job or you love your career and can’t imagine leaving it, getting prepared for retirement sooner rather than later is wise. Building financial security and actively maintaining your health now gives you more options and reduces any stress you may experience about the future.
A recent UnitedHealthcare survey found 46% of older adults worry about not having enough money as they age. Twelve percent of retired adults, or those who had retirement plans, re-entered the workforce because they needed the money.
Here are five planning strategies to make sure you can retire on your terms no matter your budget.
1. Determine your retirement savings goal
To know if you’re on track, figure the total amount of retirement savings you’ll need. While you can’t be sure exactly how much you’ll spend in the future, you can create an estimate using your current budget.
Add up the total of your living expenses, such as housing, food, insurance and transportation. Once you’re retired, some costs may end, such as purchasing career-related clothing or commuting. Expenses such as travel, hobbies and insurance may also have a new impact on your budget after retirement.
A common target is to assume you will need 70% to 80% of your pre-retirement income after you stop working, but there isn’t a one-size-fits-all answer for how much retirement savings you should have. It depends on many variables, including:
- The age at which you want to retire
- The lifestyle you want to live—what are your hopes and goals for retirement?
- Your future debt, such as a mortgage or car loans
- How much you wish to withdraw from savings each year
- Your average pre- and post-retirement investment returns
- The amount of Social Security retirement income you’ll receive
You might have other assets, such as a mortgage-free home or income during retirement, to boost your future financial security. To help crunch the numbers, use an online retirement calculator or consult with a certified financial planner for guidance.
2. Use a spending plan that prioritizes retirement
Once you have an idea of how much you…
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