Retirement doesn’t mark an end to your journey. It’s only the beginning of your path, venturing out on the open highway of freedom. We dream of enjoying idle weekdays and having unlimited weekends to indulge in our hobbies and passions. But how many of us actively plan and save for a healthy and comfortable retirement?
While the formula hasn’t changed much over the decades, modern-day savers face numerous challenges. Most of us struggle between an auto loan and mortgage and other liabilities draining our monthly paycheck and life quality. So, how does one muster the discipline or create a sustainable income stream to save for a healthy retirement?
Rising inflation and expenses compromise our life quality, forcing us to save less and spend more to stay afloat. Retirees must save and explore investment vehicles to create a nest egg covering their housing, medical and life expenses. Some downsize to smaller properties while others sell their assets and relocate to nursing homes. How do you envision your retirement years?
Keep reading to learn more about planning a healthy and comfortable retirement.
Create a Retirement Saving Plan
Today, life expectancy is much longer than the 90s or 80s, and fixed investment vehicles don’t yield significant returns. So, unlike your father or your grandfather, you can’t invest your retirement savings in bonds to enjoy high rates of return. What’s more alarming is that companies worldwide are discarding benefit pensions that allow employees a sizable nest egg for retirement. Businesses are embracing defined contribution plans that don’t offer substantial security.
Are you planning to spend your retirement in Australia? It’s wise to consult an advisor or expert for a retirement planning guide in Australia to factor in various expenses. Your retirement savings must account for expenses like housing, medical care, travel, food, and other activities that define your lifestyle. Given these dynamics, savings are the most viable route to a comfortable retirement. Tailoring your retirement plan to the local economy and forecasted expenses will help you avoid unpleasant surprises.
The country, state, or city where you plan to spend your retirement years matters significantly because inflation rates consume our savings. Expenses continue to rise, as does the value of money, and it’s crucial to tailor your retirement plan to economic forces. Many of us feel overwhelmed imagining ourselves living the life of a 70-year-old senior, reliant on others for basic needs. Saving for an unknown future isn’t easy, so you need a solid retirement plan that evolves with time.
Map out your Retirement Goals
Everyone has a different vision for their retirement years, stemming from their idea of life quality, comfort, and contentment. Some couples dream of traveling the world after retirement and ensuring their children are happily settled in their lives. Others dream of selling their properties and downsizing to a small but comfortable home in a vibrant suburban community. It’s crucial to think about how you intend to spend your life in retirement to work towards achieving your goals.
Now, visualize your life after retirement, and jot down your retirement goals. Once you’re done fantasizing about traveling, playing with your grandchildren, and gardening, it’s time to do some costing. After all, you will have to tackle numerous expenses without a steady job and monthly income. Here’s a trick that will help: fix yourself a cup of coffee, and sit down with a notepad and a pen.
It’s wise to think about inflation and the rising costs of commodities, healthcare, housing, food, and other expenses. Keep in mind that many of your current expenses, like childcare, education, and mortgage, won’t exist after retirement. Your major expenses will revolve around healthcare, especially if you or your spouse have a chronic illness.
Suppose you use your savings to invest in a rental or multi-family property. In that case, you can enjoy a comfortable retirement with your pension, rental income, and social security funds. Setting goals is crucial to define milestones and create a realistic roadmap to set up your post-retirement income streams.
Forecasting & Calculating your Expenses
The future is uncertain, and planning for the unknown is never easy. But with a bit of guesswork and economic understanding, you can factor some expected costs into your retirement calculations. Which expenses are you expecting to pay during your retirement years? It’s wise to create a realistic budget to save efficiently and work towards generating sustainable post-retirement income streams.
Most retirees rent out their properties and carve out small living quarters to reduce home maintenance expenses.
Healthcare costs are a massive financial drain for retirees, especially if you have a chronic or life-threatening illness. On average, retired couples need over $290,000 for long-term care, medical expenses, and senior care nursing professionals. Couples can explore retirement healthcare insurance products to avoid relying on family members for medical bills.
Your post-retirement life won’t revolve around hospitals and home maintenance. You also need to consider entertainment or subscription costs if you enjoy golfing and country clubs. If you plan it right, you can enjoy fine dining, art, and culture and travel as frequently.
When should you retire?
Here’s the most challenging question of one’s life: what’s the golden number for your retirement? It’s different for everyone, for we plan our lives around our ambitions, interests, passions, and dreams. Some of us don’t want to retire, while others plan and save for early retirement. When should you retire is a question that demands self-reflection and probing yourself for the correct answer.
If you’re looking for financial advice to make this decision, it’s fair to let your savings decide. It’s wise to save over $1 million before you willingly retire. Savings and multiple income streams create a strong sense of financial stability and security. Retirees who take the landlord route find themselves working without overextending obligations and ample financial protection.
It’s also wise to plan your retirement after clearing all your debt and liabilities. Entering retirement without paying off your debts is an absolute nightmare best avoided.
Planning a healthy retirement boils down to setting your finances in order today. If you’re not financially savvy today, you can’t save for a healthy and comfortable future. The process begins with mapping your post-retirement goals and creating a game plan to achieve your envisioned lifestyle. Working with an advisor is wise if you’re paying off overwhelming debt that doesn’t let you save consistently.