Retirement may be right around the corner or you may have a few years to continue working. Either way, you can start planning now. We put together 6 Tips to help you prepare for retirement:
Start investing early. The earlier you start, the more time your investment has to grow and weather market volatility. Your investment has the potential to grow exponentially when left for longer periods of time.
Know your retirement needs. What are some of your plans during retirement? Travel? Enjoy the home life? Your goal is to not run out of money during retirement. The average person has around 20 years in retirement and needs around 70-80% of their preretirement income to live comfortably. Having a budget will help ensure your money is spent wisely during this time.
Pay down debt. The less debt you have, the more money have to enjoy other things, like travel. Your goal should include paying off any large debts, such as a mortgage, car payments, and credit cards.
Get your documents in order. Here are a few important documents to have: a will, trust, and power of attorney. You will also want to have life insurance and long term care insurance (if necessary). Last, begin looking at Medicare parts A and B, paired with part C (Medicare Advantage) and part D (prescription drug plan) around age 64.
Don't touch your retirement savings. Investing is for the long-term! Typically, withdrawing your money may result in loss of principle, interest, and potential tax penalties. If you need short-term cash, look into savings accounts, CDs, or money market accounts.
Work with a finance expert. Financial advisor/planners help you design and manage a financial strategy to prevent you from running out of money during retirement. It is important that the individual you choose is licensed and registered to offer investment advice.
Preparing for retirement early is essential for financial success in the long run. Take the first step today on your journey to retirement!
