The average American thinks they’ll be ready for retirement if they can save between $100,000 and $250,000. In reality, though, retirees in all 50 states need to save more than $1 million to cover the average cost of living.
True, a seven-figure savings account might be outside of your reach. But there are countless other retirement planning tips you can use to prepare for your “Golden Years.”
Our retirement guide will give you some fresh ideas as you get ready to retire. Keep reading below!
Speak With an Estate Planner
Estate planning isn’t just for the wealthy. No matter how old you are or what your portfolio looks like, it’s never too soon to think about your financial future.
For example, which types of investments make the most sense for your age, income, and family status? Who will eventually inherit your property and assets? What can you do now to have the best chance of saving for a comfortable retirement?
Take a look here for more information about this essential part of retirement planning.
Estimate Your Retirement Budget
More than a quarter of Americans feel they’ll never be able to retire, so they don’t even bother planning for it. This kind of thinking is not only inaccurate, but it’s incredibly risky!
You may never save a million dollars, but you can do something to better your financial future. Saving $100 a month is better than saving 450, but even saving $20 is better than saving nothing at all.
At the very least, use an online calculator to get a ballpark idea of your retirement budget. Experts recommend planning for 70%-80% of your current expenditures.
However, this doesn’t include the risk of inflation, serious health problems, or other unknowns. It also doesn’t factor in lifestyle goals and preferences — for example, buying a vacation home or extensive travel abroad.
Evaluate Savings Options
As you make your retirement plans, it’s wise to learn about all the options that are available to you.
If your employer offers a sponsored retirement plan, such as a 401(k) or 403(b), take advantage of it. Contributions reduce your taxable income and you also won’t pay taxes until you withdraw the funds. Best of all, you can take your plan with you even if you switch jobs.
IRAs are another great way to boost your savings. A traditional IRA acts as a tax-deferred savings plan, meaning you pay no taxes until you withdraw the money. A Roth IRA works the other way around, where you pay the taxes when you contribute and the money is tax-free when you use it.
Another option to look into is an HSA, or health savings account. By 2028, the average American will pay $18,000 a year for healthcare costs, so the time to prepare is right now.
Are You Ready for Retirement?
Your retirement budget is an important start, but it’s not the only factor that determines when you’re ready for retirement. Use the tips above to get your retirement plans in motion, whether it’s a few years or a few decades away.
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