5 Financial Goals to Make Before You Plan to Retire
Like most of us, you may be thinking about your future as a retired individual. Thoughts like, “what will I do?” and “Where do I want to go?” may be ringing in your head. Retirement is far away for some of you reading this post and for others, it may be sooner.
One of the most important things you should be thinking about when it comes to retirement is your financial goals. When you no longer work and still have your lifestyle to maintain, how will things work? Will you still be able to maintain the lifestyle you’ve worked hard to have? Will you have the money for any medical bills you’ll need to pay beyond Medicaid?
This is where planning can help to put your mind at ease. To ensure your retirement is a pleasant time in your life, there are some important financial factors you should plan for now. Consider these tips on the 5 top goals you should have for your finances, before you retire:
Table of Contents
1. Start saving
One of the best ways to ensure your retirement is what you’ve dreamed of when it comes to living comfortably is to start saving as soon as you can. While retirement may seem so far away, it’s hard to fathom why you should start now, consider the type of lifestyle you will want to have when you’re no longer working yet still want to enjoy life (which you will). The more money you’ll have saved, the better. Whether you hire a financial professional to help out with a savings goal calculator and tips on the best way to manage your money or you simply go to your bank to open your savings account for now, getting started with the habit can benefit you for years to come.
2. Take advantage of investment opportunities
Do you have an investment portfolio? If you don’t, it could be a wise time to get started—especially if retirement is still a decade or two away. Investment will help your money to grow and you want that to happen. As the years pass and retirement gets closer, what you once thought of as a “ton of money in savings” may not be as much when it’s time to say goodbye to the workforce. Getting help from a professional can help you decide on the best option for you—whether it’s stocks or real estate (owning a home now can pay off if you plan to sell and travel after retirement)—and help you determine if you are willing to take high risks for a greater return or you would rather play it safe. Also consider what type of investment account you want, whether it’s one that allows you to be hands-on or another option that is managed for you.
3. Plan for taxes
Taxes may not be fun, but they are a necessary evil. While you hope for a lower tax rate in FBAR. when you’re retired, it may not be the case. Anytime you withdraw from a retirement plan, you could be hit with taxes and when you’re retired, you’ll still be expected to file and pay taxes. Fortunately, there are ways to minimize the amount you’ll need to pay, but these decisions for your future have to happen when you start saving. Roth accounts are known to help those in retirement get lower brackets for their taxes. A financial professional or a tax software can help you understand retirement taxes better, so you make the right decisions for your specific lifestyle and needs.
4. Avoid debt.
To get the most out of retirement, avoid debt. Honestly, you shouldn’t let debt build up as a young person, but when you’re retired, it’s the last thing you’ll want. If you’re having a hard time paying it off now, while you build your career, consider designating the last decade of your working life to paying off that debt so that when retirement comes, it’s all paid off. In the meantime, you’ll want to start practicing habits to avoid getting into any more debt, as the more you accrue the higher and harder it will be to get rid of. One of the most common ways people increase their debt is through the use of credit cards. Always remember, what you spend on that card, you’ll need to pay back. Don’t rake in the thousands in debt just because you want something shiny and new that you may not even use.
5. Budget responsibly
To avoid debt, to save, and to invest your money and make it to retirement with a comfortable amount of money to live on, along with your pension, etc., you’ll need to exercise a lot of control over what you spend your money on. Do you know where it all goes? Some people live their lives on the edge of their seat, with the idea of “money in, money out” and end up wondering where it all went. To ensure a comfortable retirement, start budgeting today. With a budget, you can see where most of your money is going, what you’ll have left over after all of your bills are paid, and how much you can realistically put into your savings. Allow for spending room for little extras here and there but don’t exceed that amount. Your future self will thank you.
Are these goals worth the trouble?
If you want to be sitting on a cruise deck traveling the world with the love of your life without a care in the world, planning ahead for your retirement is more than worth it. You may be young and working hard now, but the day will come where you’ll be happy you saved all that money. Any time you cringe at putting earnings into savings, think about all the things you’ll be able to do with your free time in retirement.
Who doesn’t want to enjoy their golden years? It’s the time when you can finally sit back and relax and do all the things you’ve been putting off for “one day”. To make your dream a reality, start working towards these five goals as soon as you can.
Matt Casadona has a Bachelor of Science in Business Administration, with a concentration in Marketing and a minor in Psychology. He is currently a contributing editor for 365 Business Tips. Matt is passionate about marketing and business strategy and enjoys the San Diego life, traveling and music.