Take the time to design a personal road map reflecting your true needs and wishes if you want to retire successfully. If you want to retire successfully, define your retirement goals, timely plan for when you will retire, assess your financial status, reduce your spending and count on rising inflation rates. Invest wisely and diversify your investments.
Below listed are several steps that can assist you in preparing for a successful retirement.
1. Define you retirement goals
What do you dream about doing in retirement? Make a written list of your needs and wishes and then categorize them into specific goals. Your success in retirement is directly dependent on how well you manage to define your goals. If you feel inspired and excited by your needs and wishes, you will know that you are on the right track.
2. Timely plan for when you will retire
Unless you are completely financially independent, your retirement age will be crucial in determining the amount of savings necessary for your retirement and how long your savings will last. Do not forget to count in rising inflation and tax rates.
3. How are you doing financially?
Take the time to assess your income sources for retirement. Any income you receive from pensions, part-time work, or a business can significantly reduce the amount of income needed from your personal savings. If you are struggling to save funds for retirement and are worried about outliving your money, you may want to delay your retirement as working a few more years can significantly improve your standard of living in retirement.
4. Reduce your spending
Reduce your spending and eliminate your debt if you want to enjoy peaceful and secure retirement. In order to decrease your expenses, you may want to downsize when you retire. Downsizing can lead to huge savings long-term.
5. Count on rising inflation rates
Health care is likely to be your biggest expenditure in retirement as health care inflation runs twice as high as the rate of normal inflation. With increased longevity, our retirement savings will need to last much longer than originally intended due to rising inflation rates. Be aware that it may take three times as much to meet your living expenses ten years or more into retirement than it does now.
6. Invest wisely
Take a full advantage of the free money offered through employee sponsored retirement plans. Maximize the use of tax efficient investing by investing into personal retirement funds.
7. Diversify your investments
Diversify your retirement investments so as to not place all your eggs in one basket. The worst thing that you could do is to depend on only one or two sources of retirement income in today’s uncertain times. Purchase as many varied investments as you can such as real estate, stocks, mutual funds and bussinesses.