As retirement approaches, it is only legitimate to wonder what quality of life and lifestyle you’ll be able to enjoy during your golden years. But when it comes down to securing your financial well-being after leaving your professional life behind, nothing should be left to chance!
Luckily, with the right strategies, you can boost your retirement savings and gain confidence in the fact that you have saved enough to maintain comfortable living standards.
Let’s start with the ones below!
Take a Hard Look at Your Finances – and at Your Lifestyle!
If you don’t know whether your savings are enough to cover your living expenses after retirement, the first step is to look at your current financial situation and lifestyle.
Some critical indicators of how well you are doing financially include:
- The size of your savings accounts
- Your debt-to-income ratio
- Your assets, including cash, investments, and real estate properties
- Passive income sources, i.e.: rentals
- Your liabilities
- Your credit score and credit history
- Your spending habits
Once you have evaluated your financial health, you can take steps to reduce your debt, improve your savings, and boost your net worth.
Set Clear Goals
The next step is to determine how much you need to live comfortably in retirement – and how far you are from reaching your goal! According to estimations by the Federal Reserve, most non-retired adults have some retirement savings, but only 36% of the working professionals polled reported their retirement savings being on track.
But how much do you actually need to retire? Unfortunately, there is no one-size-fits-all formula, and a lot will depend on your current lifestyle, savings, and monthly expenses. However, experts recommend having somewhere around $1 million saved, or a sum that would equal 80-90% of your pre-retirement income or 12 times your pre-retirement salary.
Choose an IRA Provider That Gives You Access to Financial Planning
Whether you are just starting to plan for retirement or you are looking for a better alternative to your current savings account, you might open an IRA account online that offers financial planning features.
The right IRA can offer several benefits, including tax-deferred growth and protection against bankruptcy. What’s more, multiple people can contribute to the account, and, with a wider suite of assets compared to 401(k) plans, IRAs offer significant capital gain potential.
Pro tip: maintain your withdrawal rate around the 4% mark to make your retirement savings last 30 years!
Join Movements Such As FIRE
If you are at the beginning of your professional life and you wish to start planning for your retirement early on, you might consider looking into new movements such as FIRE (Financial Independence, Retire Early).
This movement involves putting aside up to 70-80% of your income each month while you are still working and only withdrawing around 3-4% of your savings to cover living expenses after retirement.
Although this movement requires followers to live a minimalist lifestyle and keep expenses to a minimum, it might allow you to retire as early as your 40s!
Photo by Sven Mieke on Unsplash
Don’t Skimp on Insurance Coverage
The strategies above can help you make your personal budget go further, maximize the return from your investments, and retire comfortably. But if you are planning to rely on your liquid and illiquid assets during your golden years, it is crucial to invest in insurance policies that will efficiently protect your portfolio.
Some policies worth having include:
- Health and medical insurance cover
- Long-term disability coverage or long-term care insurance
- Life insurance cover (even if you don’t have family members relying on your income anymore, whole life insurance policies can add to the financial inheritance you are looking to pass on and cover your final expenses)
- Homeowner insurance
- Car insurance
Continue Saving and Investing
Whether you are approaching your retirement years or you still have a career to build in front of you, don’t stop working towards your retirement goals! According to experts, you should strive to save or invest at least 15-25% of your after-tax income each month – or more, if you are pursuing FIRE.
If you are struggling to bulk out your retirement savings account, don’t think twice about partnering with a specialized financial advisor! The help of an expert can prove invaluable to maintaining your living standards in your golden years!