Planning for retirement comes with some big decisions. Between finding ways to pass the time and keep busy to where the funding for the rest of your life is going to come from, you need a plan. We have tips to help you plan your finances in order to get everything you want out of retirement.
Know your retirement needs
Plan out your budget after you finish working. Yes, some of your bills will go away. For instance, the amount of money you spend on gas will be greatly reduced because you’re not commuting every day. However, you will spend more time at home so your costs in utilities and home goods will increase. Write out your budget and make a plan to fit your finances within it. This will make it easier to know what you need to do with your retirement fund to get by.
Ways to meet your needs
Meet your employer’s match
Employers typically match up to a specified percentage of your pre-tax income to your employee 401(k) plan. In order to gain the full benefit of your retirement plan, max out the amount that your employer offers to match. Whether they’re offering a 50% match or even up to 100%, you’re getting free money put into your 401(k).
Open an IRA
You can personally save for retirement by opening an IRA, or individual retirement account, with the financial institution that you currently use. Depending on the type of IRA you open, you can either deduct that amount of money that you put into your account each year or enjoy potentially tax-free growth. Speak with a financial expert to find out which IRA is best for you.
Take advantage of catch-up contributions
If you’re at least 50 years old, you can take advantage of catch-up contributions to your retirement fund. The extra funds that you can contribute depend on whether you’re contributing to a 401(k) or an IRA. As of 2021, you can contribute up to an extra $6,500, while an IRA allows an extra $1,000.
Know your retirement wants
When it comes to retirement, everybody wants to spend it in different ways. Whether you want to spend your years traveling the world, playing golf every day, or taking up a new hobby, you’re going to need the money to fund your ambitions. Below are tips that you can use to make sure you can afford to live the life that you want.
Ways to fulfill your wants
Generate passive income
Finding ways to generate passive income is a great idea for retirement regardless of your plans. The extra income can help create a more comfortable financial situation for your everyday needs. Although, if you’re confident that you can meet your needs without passive income, then it’s a great way to fund your retirement dreams.
Some ideas for generating passive income are renting out a portion of your home, selling photos, or writing an e-book. If you have an unused room or basement, you can bring in extra money each month by renting out the extra space. While an e-book will take a good amount of effort to write and put together, you can enjoy profits from your book once you have it up for sale on Amazon or another e-book platform.
Take out a reverse mortgage
Your home can generate more income for you than just renting out a room. If you’re at least 62 years old, you can take out a reverse mortgage against your home’s equity to get some extra cash for retirement. Additional requirements to take out a reverse mortgage include at least 50% equity in your home, living in your home as your primary residence, as well as the financial ability and willingness to meet loan obligations. A major benefit of a reverse mortgage is getting a large amount of money fast that doesn’t need to be paid back to the lender until you move out of the home.
Speak to an expert to learn more about reverse mortgages and how you can benefit from one. Use this reverse mortgage calculator by All Reverse Mortgage to calculate real-time rates and find out about your eligibility.
This might be a simple piece of advice, but you can get extra money in retirement by saving extra beforehand. Aside from contributing money to your 401(k) or IRA, put money in a money market account. While these accounts generate funds at a variable yield, it’s a great way to generate more money in a short amount of time. While the initial deposit requirement is higher than a traditional savings account, you’ll enjoy a higher yield. This is a great place to tuck away some extra money for retirement.
You can set up a money market account with your current financial institution or an online bank.
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.