If there’s one common goal everyone seems to be concerned about reaching, it’s retirement. Many of us spend 30-40 years carefully plotting and planning for this far-off date. But when you really break it down, the idea of planning for retirement—a self-funded, work-free period that can span decades—is pretty overwhelming.
Today, we begin our two-part series on creating a retirement action plan. We’ve broken down the steps you need to take into approachable, non-intimidating chunks that’ll help get you on the right path to your future. Today, let’s take a look at the first 5 steps.
1. Establish your retirement goals: It’s next to impossible to set a course if you don’t know what you’re setting a course for. Think about your ideal retirement age, lifestyle, and budget. Write them down and do the math to determine how much you’d need to save in order to reach these goals based on your life expectancy. If that number seems unreasonable, consider adjusting your goals by increasing your retirement age and modifying your lifestyle expectations so you’ll need less in savings to support them.
2. Set 5-year milestones: The first exercise will have given you a general number to aim for. Now it’s time to set milestone goals every five years. These mark the savings you should have accrued by a set age in order to be within your ultimate goal.
3. Create a savings plan: You need to save money in order to reach your milestones, and after looking at the hard numbers, you may have found that you’re not currently saving enough each year to get there. Modify your budget so that you can achieve your next milestone. Note that you may need to adjust your budget every five years in order for your savings to keep pace with your goals.
4. Start thinking about your health: One of the biggest expenses for retirees is their health. Not only can it cost them comfort and quality of life, but when you have health problems it can devastate your savings. That’s why it’s a good idea to start eating right and exercising now, so you can prevent certain chronic illnesses such as high blood pressure and type II diabetes.
5. Create a debt repayment plan: No one wants to carry debt into his or her retirement. And even if you’re decades away from retiring, the expense of the debt you hold right now is costing your retirement both contributions and gains. Rework your budget to increase your debt repayments and get out of debt faster.
At Kramer Wealth Managers, we can help you work through each of these steps in order to help achieve your ideal retirement. Contact us today to speak with one of our wealth managers about helping implement your retirement action plan, and be sure to check back in a few weeks to read the second part of this series.