Before retiring you will want to start planning what your retirement will look like. You will want to take a look at your financials since once you retire, you won’t be making additional money like you once were.
1. Identify Where You Can Reduce Spending:
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Transportation
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Do you pay monthly for a vehicle? Do you lease or have you purchased it? Leasing is great, but you don’t get anything back once the lease is over. Owning a car is a good investment, and you can sell it in the end. If you need a vehicle after retirement, look at lower-cost options, find a vehicle that gets good gas mileage, and find a vehicle that is inexpensive to insure.
Without traveling to and from work anymore you may be able to reduce your car use to one car per household. This would also save you on a car payment, car insurance, and maintenance each month.
Without the cost of transportation, you may save $10 per day in gasoline. Try not to run that bill up each month, making daily trips. If you have to go out, try to schedule them all at once.
You could also begin walking or biking instead of using a car throughout the week. This may be ideal if you are closer to stores and have mild weather.
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Memberships
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Go through your monthly memberships and get rid of anything you can. You probably don’t need three different memberships to different TV programs. Or other online memberships. You may also belong to physical memberships, so evaluate what you actually use and remove those you don’t.
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Utilities
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Your home costs you a certain amount each month. Evaluate your home’s monthly costs. Is it water, electricity, or internet? See if you can reduce your internet and cable bill.
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Housing
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Your current home may be perfect for you as you retire, but if it’s costing you a great deal to maintain or pay for, it may be time to find something smaller for your retirement.
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Healthcare
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Look at your current insurance plan and look at what’s available for you now that you are in retirement age.
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Food
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Do you eat out often? You may want to try some meal planning or cooking to save on weekly spending.
2. How to calculate retirement needs:
Look at your current monthly spending. Multiply that by 12, and that is your annual retirement needs. Increase that number by 15% to give yourself some room for extras.
To know what you need in total, take that annual spending number and multiply that by 25.
3. Ideas to add income to your retirement:
Part-time jobs at certain stores give workers health insurance, a paycheck, and a purpose. Getting a job may be fun for you, especially if you find a job that is part of your hobby. Not taking from your retirement fund will also make you feel better when you are wanting to splurge, go on vacation, or buy some items for a hobby.
4. Keep your expenses in check:
Try not to stress yourself over spending but keep yourself accountable as you head towards retirement age and begin retirement.
5. Early Investments Before Retiring
Besides your retirement funds, there are some great investments.
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Real estate
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There are some great investments if you purchase real estate. One of those options is to have a rental that you make money on.
You could also purchase a property to sell in a few years or sell your own home and move into a smaller home with less overhead.
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Financial Planning
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Look at when you can take your money out of your retirement funds. You will want to wait until you don’t have to pay taxes on them. There are also products like the Ladder Conversion System to transfer traditional IRA to Roth IRA. Or you can transition to a 40% Bond portfolio and a 60% stock portfolio. Talk to a financial planner.
