Ways to Start Preparing for Retirement - Brink's Money
Ways to Start Preparing for Retirement
22 Nov 2021
Establishing financial security when it’s time for retirement doesn’t happen overnight. On the contrary, it’s a process that takes heavy planning and preparation. In a perfect world, we would all start setting money aside at the first paycheck but sometimes it’s just not that easy and you might have to start later on in life. Whether retirement is approaching for you or you simply want to get a head start, there are proactive actions you can take to invest in your future.
Pay Off Your Debt
As part of planning for retirement, one of your first goals should be to free up more money that you can save or plan to spend later on. Freeing up money is made possible by paying down your debt which includes credit cards, mortgage, and student or car loans. Examine the amount you owe to loans or interest and make a plan to pay it off. Any extra amount you can set aside for your repayment plan helps and this will help ensure you reduce your expenses during retirement.
Contribute to Your 401(k) Plan
One of the most efficient steps you can take to make certain that you are in good shape to retire is to contribute to your 401(k) plan. If your employer offers a 401(k) as part of your benefits, it’s a good start for saving. When you enroll in a plan, funds will be automatically taken out of your paycheck so you’ll be saving without having to think about it. In some cases, your employer may even match your yearly contributions to your plan. A good rule of thumb for your 401(k) contributions is to give as much as you can when you’re younger and don’t have as many financial responsibilities.
Estimate Your Retirement Expenses
Retirement is expensive and this is something you’ll need to consider as you start planning ahead. While some necessary costs such as healthcare may increase in retirement, other costs such as transportation may experience a decline. Estimating your retirement expenses relies on the life you plan to live in retirement so it’s important that you give some thought about the kind of things you want or need to spend money on.
When it comes to figuring out how much money you need to retire, there is no such thing as a perfect number. This number varies from person to person because it should reflect your current income and expenses as well as your anticipated costs when in retirement. Typically, financial experts recommend setting aside anywhere from 70% to 90% of your annual pre-retirement income to have it available each year in retirement.
Set Long-Term Goals
Thinking about and planning for the future can’t happen without the process of setting long-term goals. Goals, while they can be exciting to achieve, are there to provide you a sense of guidance and paint a picture of where you ideally want to be at some point. Perhaps you want to travel the world or retire debt free. Regardless of what your goals might be, it’s helpful to ask yourself important questions to help you set these goals. For example:
Do you want to retire by a certain age?
Do you want to rent a home or finish paying off your mortgage?
Are you anticipating any significant health expenses?
Start Budgeting and Saving
If you are already making it a habit to save, then great news, that’s exactly what you need to be doing! If you take any piece of retirement advice with you, let it be saving and budgeting. If you are unsure on where to begin, start small and little by little work your way up to saving a larger amount each month. An immense advantage to starting sooner rather than later is having more time to watch your money grow. When you sit down to create your monthly budget, be sure to look at your monthly income, write out every expense you anticipate to have, and identify any areas that you can cut down on to make more room for saving towards retirement.
Create a Social Security Account
We have all heard about Social Security but how much do you really know about how it works and what you can expect? To get you better prepared for Social Security, you should create a Social Security account. When you sign up for an account, you can see how much you have paid into Social Security, an estimate on your future payments, and even keep your information current in case you move.
Retirement is a lifelong goal that we all aspire to achieve one day. For some, it feels like a lifetime away while others are looking forward to winding down in the next few years. No matter what your timeframe is, it’s important to start envisioning those years and the type of things you want to have accomplished by then. With a little planning and time, achieving retirement can be made manageable.
The money you set aside for your retirement should be kept in safe hands and that’s exactly what Brink’s Money is here to help you with. Trust and security are a part of our heritage so when you sign up for a Brink’s Money Prepaid Mastercard, you get more than a card. Enjoy our advanced card features, including an optional savings account, when you enroll today.
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