According to the Employee Benefit Research Institute, only two thirds of Americans have retirement savings. And even then, most have saved only $25,000 or less.
The Center for Research at Boston College states that if you retire at 66, only half of retired households will be able to maintain their current standard of living. If you retire at 70, then about 86% will be able to enjoy a comfortable retirement.
When you hear numbers like these, it's enough to give any middle aged persons a sudden head-start in retirement planning to avoid the many unpleasant things that a lack of fiscal stability can cause.
With that, let us explore some tips and tricks to ensure that a comfortable retirement is within our grasp.
1) Make a list of Dreams
There is no age limit to dreams. What you couldn't do at 20, maybe you can do at 50. Make a list of defined goals and numbers corresponding to the savings you plan, and review it every year. It's a better incentive to save, rather than accumulating a bunch of money 'for the future' and not have any idea what that amount of money will buy you.
2) Stretch Your Retirement Funds
Live within your means! Enjoy the occasional treat, but remind yourself of the reality. You're not young enough now to make the kind of running income you used to enjoy, and you're also old enough to expect certain kinds of age-related ailments that would take a toll on your fixed income. Not everyone's health policy covers every kind of medication, test or hospitalization expenses.
3) Put Yourself First
During a flight, a flight attendant tells you to put your own mask on first and then secure your child's mask. Why do you think that is? Well, if you're not equipped to take care of yourself first, how are you going to be of any use to your children?
Don't risk your retirement savings for your children's education. Every country has provisions to fund your child's education, so use those as best as you can. Don't mortgage or withdraw your money for old age to send your children to Harvard. As selfish as it may seem right now, it's risky to think that your child will look after you when they're earning, in return for all the money you spent on them. Today's lifestyle doesn't accommodate for that kind of choice.
4) Don't Use Up Home Equity
When in your fifties or sixties, don't use your home equity until you're in your late seventies if you can avoid it. That's when you're really going to need more money for home repairs and rising taxes and utilities and what not.
5) Declare Bankruptcy
This is harsh, drastic, and takes some amount of serious thought but you might consider it a better option than taking a loan to pay of credit card debts. Credit card companies typically are not going to fold whether or not you pay up your debts. However, you might.
If your debt is equal to half of your income, it's time to get help from an advisor and arrest the damage. A lot of bankruptcy consultants do pro bono work, as that's typically the business's nature. Find a good one and avoid facing the poverty line. It's much harsher than you can imagine.
6) Consider Part-Time Work
They say old age is second childhood. Remember how you earned money as a kid, through babysitting or teaching someone a subject? There's no shame in rendering these easy services to earn a little extra income that might just help when expenses rise, as they surely would.
7) Health Is Wealth
This statement rings truer and truer as age progresses. If you're responsible and vigilant about your health, you'll spend less on medications and treatments.
8) Income Annuity Is Great
Don't be fooled by the bad mouthing of annuities, about how its proposition is complication and money-grubbing. Look at the option of a Single Payment Income Annuity. It's a guaranteed monthly income given to you as long as you are alive. Even if you outlive your other savings, this will keep trickling in. It's an underrated insurance product if you feel you might outlive your savings plans.
9) Assess Your Risk
How much money from your savings can you afford to use? There are so many financial products in the market that you'll be ready to just commit to one so that you can spare yourself from the torture of contradictions. However, make sure to assess your risk.
Even if a product is promising lower returns, if it is a time-tested safe and consistent product, it is better to invest in it rather than risk your savings in a scheme that tanks after a year.
10) Review and Revamp
Monitor how well your investments are doing every year. If some appear to be sluggish, check with a reliable financial advisor where you can relocate those funds and start earning a better bank for your buck.
There is always plenty of advice and resources on the Internet for your own personal use! However, remember to consult a financial advisor before you actually sign away your life's savings!
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