As we get closer to retirement age, it is essential to ensure we are well-prepared financially. At Summit, our job is to guide you through this process. With life expectancy increasing and medical expenses also increasing, having adequate savings and investments to maintain our lifestyles in retirement is becoming more and more challenging. If you're a pre-retiree, you might be wondering what financial planning tips you should follow now to secure a comfortable life post-retirement. Here are five financial planning tips that pre-retirees should consider.
Make sure you have a written retirement plan:
The first step towards financial planning is to build a solid written retirement plan. What are the things you want to do in retirement? Do you wish to maintain your current lifestyle? Do you want to travel or buy a lake house? Are you going to downgrade to a smaller home or condo? Working with a financial planner will help clarify your vision for your retirement, which in turn will help uncover what you will need to save. Your plan should outline your retirement goals and how much you need to earn to meet those goals. A solid retirement plan will help ensure you have enough funds to retire comfortably and stress-free.
Create a budget:
Regardless of where you are in life, creating a budget is essential. It is even more essential when we get closer to retirement. Budgeting will help you track your spending, savings, investments, and income. Once you have an idea of how much money you are spending, you can start making changes and adjustments to your spending patterns. For instance, you may decide to cut back on entertainment expenses and redirect those funds toward retirement funds.
It's important to eliminate any high-interest debt that you may have before you retire. When you have debt, you will have to allocate some of your retirement savings to repay the debt. This can limit the amount of money you have for other expenses. It's recommended that you pay off high-interest credit card debts, car loans, and any other outstanding loans before you retire.
As you look to invest wisely, you will want to consider your risk tolerance, your age and investment time horizon, and historical performance, among many other things. It is crucial to invest wisely and diversify your portfolio. A financial planner can help you come up with a strategy that best suits your situation and risk tolerance. It's better to have a diverse mix of investments to minimize risks and maximize returns.
Think about Health Care:
As we age, our medical expenses tend to increase, so it's good to have a plan in place to cover those expenses. Consider exploring different healthcare options, including Medicare, to determine what plan works best for you. You may also need to consider long-term care insurance to help cover future medical expenses when you're not able to work.
Financial planning is vital, especially when you're close to retiring. By using the tips above, you can create a roadmap to financial security and enjoy an amazing retirement. Reach out so we can help you create a personalized plan that meets your unique goals and situation. Remember, the sooner you start planning, the better off you'll be in the long run.