Retirement may conjure up daydreams of some well-deserved rest, care-free days and, crossing off items from your bucket list, however, this idyll is possible only if you’ve built enough stability to sustain it. Even if planning ahead is not your strong suit or to your liking, retirement is one aspect of life in which living strictly for the moment is an almost sure recipe for disaster.
Here are a number of ways to build your retirement stability, according to Responsible Equity Release.
Striving to meet the yearly limit for contributions to your employer-sponsored and individual retirement account – 401 (k) and IRA, respectively, is a very healthy goal for any future retiree, looking for stability.
While meeting those limits is a tall order for many people – for 2019, they are $19,000 for 401 (k), plus an additional catch-up contribution of $6,000 for people over 50, and $6,000 for IRA, or $7,000 if you’re over 50.
The traditional versions of those funds are tax-deferred, meaning you pay tax on them only once you withdraw them, whereas Roth 401(k) plans and IRAs have already been taxed and grow tax-free. In 2019, however, the latter option is available only to individuals with an adjusted gross income of less than $122,000, and married couples with less than $193,000 of adjusted gross income if they’re filling jointly.
Even if you can’t meet those hefty contribution limits, striving to do so with still improve your retirement stability tremendously. Furthermore, it’s crucial to remember than many employees offer matching contributions for 401(k), which you absolutely need to take advantage of as otherwise you’d just be throwing money out of the window.
Clearing debts is perhaps the most universal way to reinforce stability and retirement and have a peace of mind.
Work no less than 35 years
That may seem like a strangely specific and random number, but it has nothing to do with opinions or lifestyle advice, and everything to do with your Social Security benefits.
The number you end up with for those benefits is the average of your 35 highest earning years. If you’ve worked less than 35 years, every year you lack to fill this quota will be calculated as 0, causing your average to plummet. For example, if you’ve worked 34 years, you will have one 0 in the equation, which is one too many.
Postpone Taking your Social Security Benefits
This tactic isn’t about saving some money for a later stage, even though that is a nice bonus, but about increasing your actual benefits. If you wait to take your Social Security benefits until you’re 70, you’ll get 130% of the amount you would have received at the standard retirement age.
Many people view retirement as a defined line beyond which work isn’t an option. However, retirement doesn’t have to adhere to such rigid notions, especially nowadays, when work arrangements are becoming more and more flexible and fluid.
You can negotiate with your company about your position and what it entails after a certain age. You could potentially work part-time, or even remotely which is getting increasingly popular and common.
Furthermore, training newcomers is perfectly suited for a soon-to-be retiree, practically epitomizing the idea of passing the torch. It can be extremely rewarding not just from a financial standpoint, but from a personal and professional one as well. Being in the position to pass the invaluable wisdom and knowledge that can be acquired only through years of experience is a true privilege for passionate professionals, z chance to leave a permanent mark on someone’s career, and even life altogether.
Unless you’re filthy rich, having no budget for retirement is simply reckless. As you get close to retirement, you need to make an accurate estimate of your yearly spendings, leaving some leeway for unexpected circumstances of both good and bad nature.
Don’t simply assume you’ll be spending less money in retirement just because you won’t be commuting to work or might enjoy simpler pleasures. More free time means more time to fill with activities, a lot of which will entail spending money.
You need to objectively assess the kind of lifestyle you’re looking to have in those years and see if your savings will be able to accommodate it.
Take Care of Your Health
This is something you should clearly be doing anyway, but having done so consistently throughout your life will literally pay dividends in your retirement. Of course, there are factors nobody could ever account for, however, you could certainly maximize your chances of good health and respectively minimize the chances of needing costly medical care.
Achieving stability in your retirement can be relatively easy, but only when it’s treated like a process rather than a last-minute solution. Diligence, consistency, and foresight are key.