The thought of retirement can bring to mind plans of relaxing and enjoying time with friends and family. However, contemplating the future can also be a source of anxiety for people who do not feel that their retirement plan is in optimal condition. Fortunately, no matter how close you are to retirement, there are always ways you can strengthen your position. Here are five ways to improve your retirement plan:
1. Create a Budget Blueprint
If you have not taken a long and serious look at your budget, the time to do so is now. Calculate what you need each month and create a workable financial plan which allows you to live within your means and save for retirement. By developing positive financial habits now you will not only put yourself in a position to make reasoned decisions with your spending and save money, but you will also be better positioned for your retirement.
2. Downsize Sooner Rather than Later
If you are nearing retirement age it may be that your children are out of the family home and you no longer need a house which will accommodate the entire family. It may also be that you don’t need to live in a more expensive neighborhood which borders highly ranked schools. This may be an ideal time to downsize into a less costly and smaller home. You can use the money you are saving on housing expenses to fund your retirement accounts.
3. Pay Down Debt
Paying down debt is an excellent goal for most everyone. For individuals looking towards retirement, reducing your debt burden will be an essential part of ensuring that you can live comfortably in the future. Cutting back may something as simple as reducing your daily trips to Starbucks or canceling that unused expensive health club membership. Once you have figured your income and expenses and how to streamline extra expenditures determine what you have left and put it towards your retirement savings accounts.
4. Work Longer
For those who expect to be relying on their Social Security benefit during retirement, it could be highly beneficial to delay receiving your payment. In fact, although you can draw a Social Security payment at age 62, each year you can put off collecting your benefit before you reach age 70, can increase your amount significantly. Additionally, if you are contributing to a defined pension plan or 401(k), working longer and adding more to these accounts, can mean increased income for you in the future.
5. Make the Most of Retirement Plans
Be certain you are contributing the maximum amount you are able to put into your retirement accounts. If your employer offers to match for your 401(k) contributions, be sure you go as high as you can. If you do not have an IRA and are able to contribute to one, open account and begin saving today. If you have a 401(k) or IRA, it may be that you have not been able to contribute as much as you would like to these accounts over the years. This may be due to your expenses and circumstances or the account contribution limits. Whatever the case may be, once you are over the age of 50 you will be allowed to catch up on your accounts by paying more than you were previously allowed. While this catch-up provision may have limitations, it is still an excellent way to fortify your 401k and IRA savings.
Planning for retirement is invaluable. By taking action today, you can build a retirement plan which will allow you the comfort and freedom you want for the future. We understand the issues which can arise during retirement planning and have experience and knowledge which can help. Please contact us online or by phone if we may be of assistance.