5 Ways to Prepare for a Worry-Free Retirement
I was talking to my mom recently about my grandma’s 80th birthday. We couldn’t decide if we want to take a family trip or throw a party.
But talking about my grandma had me thinking of something different: myself in old age. Would I be able to retire comfortably?
Would I have enough money in retirement? Would I even be able to retire? I really don’t want to have to spend my golden years being a greeter at Walmart.
My concerns are valid. Seniors are facing serious financial hardships nowadays. So much so that they're actually filing for bankruptcy at a record number. A recent study shows that people 65 and over are filing for bankruptcy at a rate three times higher than in 1991:
That’s insane. And it certainly won't be my future. And it won't be yours, either, if you follow some very simple rules of finance.
Since 1991, there’s been a shift from less government and employer responsibility toward greater individual planning. The Social Security system is failing. I’m not even sure if it’ll be around when I retire. There’s less government assistance for the elderly. And there are higher out-of-pocket medical costs.
It’ll be up to you to secure your own financial well-being. And there are five things that you can do to ensure you'll reach retirement worry free...
1. Be Free of Debt
Any debt needs to be tackled first. You can’t generate wealth if you’re in the hole. Get on a consistent payment schedule to climb out of it:
The increased number of people who are still in debt so close to retirement is crazy.
With the debt gone, those payments will no longer go to the creditor but instead stay in your pocket.
2. Stay Out of Debt
Once you’re debt free, it’s important to keep it that way. Rule of thumb, don’t spend what you don’t have.
Keep your money where it will accumulate or even grow on its own through investments. That won’t happen in the creditor’s hand.
Saving can be hard sometimes — I understand. But it's essential to be financially stable during retirement. Once again, you can't depend on Uncle Sam to fund your retirement. It’s always a good idea to have a go-to fund for a "just in case" moment.
The trick is to be consistent.
Think about it like this...
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You put $20 in a savings account with an annual percentage yield of 0.05%, depositing $20 a week. That monthly deposit of $80, done consistently over 10 years, would net you over $9,000.
After 30 years at it, you'll have almost saved up $30,000.
Every little bit counts.
4. Live Below Your Means
Leading an everyday lifestyle that puts less stress on your finances is the key to a safe retirement. Avoid luxuries and instead focus on essentials.
Now, I’m not saying to sell your home and live in a commune. Just keep in mind that your money is better appreciated in your account than on receipts.
Driving a sedan instead of an Escalade, even if you could afford it, is a good example of living below your means.
5. Stay Healthy
One of the biggest financial struggles as we get older is out-of-pocket medical expenses. This is especially true when you retire. With less employer and government assistance, you'll be responsible for all your medical expenses.
Exercise and eating healthy won't only save you money, but it'll also give you a better quality of life.
Although these practices may prove challenging, the reward will be well worth it. You’ll be able to enter your retirement with your back to the breeze and without worrying a damn about money.
John Butler Jr.
Contributing Editor, Park Avenue Digest
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