Retirement is the ultimate goal in life for many people. It’s the time where you are free to do what you want when you want, but retirement can be difficult if it isn’t planned properly.
Retirement planning is a huge undertaking that should not be taken lightly. With retirement looming on the horizon, it is important that you start to plan for retirement as early as possible before it’s too late. There are a few things you need to know about retirement-how much money will be needed to live comfortably, how much retirement will cost, and how to make your retirement comfortable and enjoyable.
A Dollar a Day Goes a Long Way
If you start retirement planning early, it’s easier to increase your retirement savings. You can begin with just $1 a day! Even if that seems like an unnoticeable amount of money, it will add up over time. If you invested $365 in retirement every year for 10 years at 6% interest per year, the total amount would be more than $10,000! There are a few annuity recommendations going around that can give you an idea of what’s on the market for those who plan their retirement. It’s important to note that many retirement calculators do not include inflation adjustments. This means that when retirement actually arrives, things may cost more than they did during your working years and your retirement savings might not stretch as far as you’d expect them to.
So, while putting away a dollar daily sounds nice – you can always do more if you can afford it – retirement planning should include other factors such as your retirement age, health, and whether you want to retire gradually or all at once.
Over Time Means More Money
One of the greatest benefits of investing early is that over time there is more potential for growth and compound interest. That means that the money you earn from your investment will also earn interest on top of that, providing you with even more retirement savings down the line.
Think about it this way: if somebody retires at the age of 65 and withdraws money from their retirement savings account for 20 years, they would only have to live on a little over $400 per month. However, if somebody starts retirement planning at 45 and makes similar withdrawals for 20 years, they would need almost $1,000 monthly to maintain the same standard of living!
It’s never too late to start saving for retirement, but starting sooner rather than later is always advisable.
Life Expectancy and Retirement Planning
On average, a woman at retirement age is expected to live about 20 years and a man around 17 years. If you do the math, that’s more than twice as long as retirement planning might have been originally intended for! That doesn’t mean that retirement planning has become irrelevant – just that it needs to take into account that you’ll be retired for longer than one or two decades.
It is important to make sure retirement planning takes future inflation rates into consideration as well because things may cost more in the future than they do today. Inflation varies from year to year but on average people expect between 2-3% of inflation each year.
You don’t want your retirement savings to run out before you die nor do you want to outlive your retirement savings.
Investing in Property
As retirement planning can take a long time, certain types of retirement investments might not be for you. If you want to invest in retirement earlier on and start retirement planning as early as possible, then the property might not be the best option.
Of course, this is not true for everyone and it depends on personal preference and what kind of retirement plan, if any, you have set out already. Sometimes retirement plans include owning your own retirement home; depending on where you live the value of your home may increase over time making it more valuable than its original cost price.
It’s important to consider this when looking into investing in retirement property because some homes are just too valuable to pass up! You can bring along an experienced broker or agent to help you assess the situation and give you some good advice on what to do next.
Old-Age and Health Care Insurance
People tend to think retirement is all about giving up work and spending their retirement traveling, but retirement planning should include covering your health care costs as well.
There are two big things you need to consider here. First of all, do you want or expect state-funded health care? Depending on where you live, the government may require a certain percentage of your retirement savings in order for them to cover your health care expenses during retirement.
Second of all, what kind of retirement plan do you have already set out? Will it cover any retirement healthcare costs? Is there a limit? What if it doesn’t rise enough for inflation rates over time? In that case, you might end up needing more retirement planning than originally planned.
The Costs of Retirement
There’s no getting around it- retirement is expensive. Even if you don’t have many debts to pay off and you’re lucky enough to have a good retirement savings plan, there are still a lot of costs associated with retirement that need to be considered.
Some of the most common retirement costs include food, travel, health care, social activities, and home maintenance/repairs.
All in all, it’s important to expect that retirement will cost you at least 70% of your original salary (or more depending on your lifestyle).
The retirement process starts with the right retirement plan. If you want to enjoy your retirement years, it is important that you have a clear vision of what retirement will look like for you and how much money it will cost. The more time you spend preparing now, the less likely things are to go wrong later on down the line when life gets stressful. Retirement should be an enjoyable period in anyone’s life-now is not too late to get started!