How to Retire Graciously on a Low Income

Having a low amount of income is not a hindrance for you to retire graciously, financially free and securely. Planning and preparing for retirement will take time, hence the earlier you start to plan and work out for your retirement, the better your retirement would be.

There are generally six steps in achieving financial stability. If you accomplish all six steps, rest assured your retirement will be so good ou can retire and enjoy life to the fullest earlier than you may expect.

Here are the six steps that you must take into serious consideration in order to retire well and worry free despite living on a low income.

1. Get health insurance. Getting sick is very costly and everybody gets sick. Hence, since you’re pretty sure that sooner or later you’ll get sick, getting a health insurance plan is a must. Some governments provide health assistance but normally, these assistance isn’t enough to cover all medical and hospitalization needs. On top of the health insurance that the government provides, it is highly advisable for you to get your own health insurance. If you get sick, at least you won’t shell out a huge amount of money because the health insurance company will cover most of your medical and hospitalization bills.

2. Get a life insurance policy. The purpose of life insurance is to replace your income generating capacity in case you either get permanently disabled or worse, you die, and provide financial assistance to your loved ones. However, life insurance policies have revolutionized and you can now enjoy its benefits. Term insurance will only cover you for a specific period of time and if nothing happened to you within the coverage period, they will give you the benefits and in most cases, in the form of cash. If you get term insurance and reach 60 years old, you can get a hefty sum out from your insurance policy.

3. Manage and/or eliminate debt. Debt has a life of its own. Most debts have interest rates, and if you don’t settle your debt immediately or at least manage it properly, it will compound and in no time, will increase significantly sinking you further down the debt hole. If you have any existing debt, prioritize paying it off first. In that moment, that is the best investment that you can make because you stop yourself from falling deeper down the debt hole. If you retire debt free, rest assured you’re worry free and can enjoy your retirement years.

4. Have an adequate amount of emergency funds. Having an emergency fund is very important because you will definitely experience emergencies at some point of your life. In most cases, emergencies will require money hence having an amount readily available will solve such problem. It is advised for you to have an amount worth three months of your income readily available for emergencies. If you’re earning $1,000 a month, then you must have at least $3,000 in your bank or drawer or anywhere accessible just in case of emergencies. If you have an emergency fund, you can definitely avoid running into debt should the need arises.

5. Accumulate and build long-term assets. Assets will take care of your retirement years. Assets or investments take time to grow but once they have reached or even exceeded their potential, they will be more than enough to support you in your retirement years. You can never prepare or act on your retirement once you’re already retired hence while you’re still young and very able, it is the perfect time to prepare for your retirement. Make it a habit to invest in paper assets such as stocks, mutual funds, bonds and other financial papers or tangible assets such as real estate or starting and engaging in business. Given some time, all of these investments will grow and provide you a very good sum.

6. Protect your assets. Just like health and life insurance that protects your income generating capacity, there are insurances that will protect the income generating capacity of your investments and assets. Since investments will take time to grow, they face enormous the risk in time especially with natural disasters. Protect them by getting an insurance policy. Just in case something happens to your assets and investments, you will be getting financial assistance from the insurance companies so you can either repair your investments or start all over again.

All of these things don’t require lots of money, but rather enormous amounts of discipline and consistency. Accomplish these steps one at a time and sooner or later, you’ll realize that you’re in a lot better shape and position financially. Health care, life insurance and general insurance premiums aren’t expensive. In fact, they are very reasonable and affordable but their benefits are so great. Paying off your debt is easy as long as you commit to it. Accumulating assets doesn’t require huge amounts to start.

By simply being consistent, you can save huge amounts of money. For example, saving $5 a day will amount to more or less $60 a month and that would sum up to $720 in a year. In ten years, that will amount to $7,200. Assuming you invest it into something that will give you a return of 10 percent annually, after 20 more years, your $7,200 will grow to $48,438. Now let’s assume that you continue to save $5 a day in the next 30 years and you put it on an investment that gives you 10 percent annually. Your $720 a year will be $21,600 in 30 years but since you invested it on an investment that gives you 10 percent annually, your $21,600 will be $142,842.24 after 30 years. Quite a hefty amount so to speak.

Did you see the power of discipline and consistency? Don’t fret or feel bad if you don’t have a huge amount of money to start with. All you need is to develop discipline and be consistent. These things are for free, and all you have to do is to work on developing it.; start now. Everyday that passes without you doing anything is a day that is wasted. A wasted $5 is a wasted $87.25 after 30 years if you don’t start now.