Preparing for retirement may be the last thing on your mind if you’ve still got many years of work ahead of you, but the earlier you get started, the better your twilight years are going to be. With that in mind, we’ve put together this list of five retirement planning moves everyone must make that will benefit both present and future you, no matter your age.
Get On Top Of Your Retirement Fund
Getting on top of your retirement fund as early in life as possible is vital to ensuring that you accrue the money you’ll need to retire comfortably. If you’re looking for a way to take better control of how your funds are managed, consider speaking with a qualified team of self-managed retirement fund professionals.
The exact nature of this account will differ depending on where you are in the world. For example, US citizens would be looking at a self-directed IRA, while in Australia, you’d want a self-managed super fund and support from the best SMSF Accountants. Either way, this route gives you ultimate control over how your retirement money is invested.
Pay Down Debts
Unless you’ve got an impressive investment portfolio, it’s pretty much a given that your income will drop when you stop working full time. Because of this, you’re going to want to ensure that you owe as little as possible when you hit retirement age. This is the best way to ensure that your funds are sufficient to support your lifestyle. The last thing you want is to be paying off credit card debt for purchases you made years ago.
Build Passive Income
Passive income is a retiree’s best friend, and a solid allocation of dividends each quarter is a great way to achieve this. While you obviously need to get independent advice based on your personal situation, investing is a good choice for most people.
The longer you’re in the market, the more you’ll benefit from compounding interest, so it makes sense to get in as early as possible. We also suggest setting up a dividend reinvestment plan until you reach an age where you’ll want that income in your pocket. Doing so will further increase your earnings over the years leading up to your retirement.
Determine Your Budget
While it may still be a while off, knowing the kind of budget you’ll need to finance everything you want to do in retirement is crucial. This will help you plan how much you’re going to need to save between now and then.
As it’s dealing with an unknown future, your budget is obviously going to be rough. However, if you’ve got a good idea of how you’d like to spend your twilight years, you can work out how much you’ll likely need based on current pricing and adjusting for inflation.
Account For Extra Required Services
Although none of us want to admit that there’s a possibility our mind or body will fail us as we age, the chance is still there. Like it or not, it’s a good idea to account for this when making your plans. You may, for instance, find yourself needing the services of a local osteopath if you’re having some physical problems, and even the best minds can succumb to age.
Working out your mental and physical muscles now can save you a whole lot of pain in the future. However, it’s also important to have health insurance and an emergency fund in place to cover any unexpected medical expenses.
Have we missed any important preparation steps? If so, feel free to share how you’re setting yourself up for a brighter future in the comments!