It’s never too early nor too late to anticipate your financial needs when you’ll reach your retirement age. If you’re within ten years of approaching that critical time, you should start doing some serious planning. Consider how you can have enough anticipated income to take care of post-retirement living expenses.
The best way to start is to make a list of the regular supply of incoming dollars you can expect to receive when your working career is over. They usually include pension, Social Security, interest-bearing investments and other assets you expect to be immediately available to you at retirement time.
Alongside that list, create another one that shows your anticipated regular outgoing expenses you’ll need to face. These can be rent or mortgage payments, utilities, food, medical care, pharmaceuticals, clothing, transportation, entertainment and other costs. Of course, your current lifestyle must change to meet those expenses if your retirement income will be less than your current working income.
Try to make the figures on both lists as accurate as possible as you project them into your future. Then compare them. For example, if your expected total costs of living during each retirement month will be $3,000, but your income from all sources will be no higher than $2,500, you’re behind in your financial preparations for retirement needs.
If that’s the current scenario, you need to do some more serious savings to make up the difference by the time you require. Some suggested actions could help fill in the gap.
1. Put more of your income into savings and sensible investments. For example, if you already have a budget of saving $50 per payday in an interest-bearing certificate, raise it to $100.
2. Cut back on your casual spending for such items as vacations, entertainment, clothing and restaurant dining. If you’re really serious about the need for increasing your retirement income by saving more, consider cutting back or discontinuing totally what could be considered unnecessary expenses. These could include costly travel, new car, casino visits, cigarettes, liquor, beer and other activities. By doing this, you’ll not only increase your available retirement money, but also enjoy healthier sunset years.
If your retirement time is sneaking up on you, and suddenly realize it will happen in just a few years, you need to do something about it. Do some math involving the total retirement income you expect and what you anticipate as the amount of money it will cost you to enjoy those leisure years. Then, take the necessary steps to make it happen.