The day you join a job, you start planning retirement. On getting your salary, you save a fraction considering retirement. However, now it has become difficult to save for retirement. Consider, most of you live longer and thus you need money for a long time – probably into your 90s. Moreover, buying bonds and expecting a good return remained a dream now. Other than this, you should consider the COVID-19 pandemic health crisis as well.
Many companies have withdrawn from pension setups and this added more to the difficulties for jobians to plan their retirement. Instead, some businesses introduced contribution plans which keep changing from time to time and hence may or not be much beneficial. Hence, here comes the question: is it possible to plan retirement the way you dream it? Obviously, you would like to enjoy your life in the best way that was not possible while you were on the job. There are endless possibilities ranging from exotic travel vacations to literary activities. Let’s talk about how to plan retirement to save post-retirement problems, especially during the financial crisis.
Saving money for post-retirement life
Imagining life at 70 or older is one of the most difficult aspects of retiring. Many individuals become so burdened by the idea of saving for the future that they don’t actually save anything. Fortunately, retirement planning is not unduly difficult, but you will need a road map to stay on track. Ideally, this road map can change over time.
Start with imagining post-retirement life. Relax on the couch and hold a pen with paper. Start writing retirement goals and costs parallel to each activity. Remember, you cannot estimate the exact costs as the inflation rate keeps getting high every year. So, calculate prices accordingly. Do plan housing, food, and healthcare budget. Followed by this, now sum up the income that you may get post-retirement. This may include pension income, social security payments, and rental income. Now evaluate income and expenses collaterally.
Golden retirement: How much savings will be enough?
Early, finance experts estimated it to be one million dollars however, now it has been increased to 2 million dollars. Some experts recommend saving eighty to ninety percent of annual re-retirement income. This is just an estimation, your situation may not apply to this number.
Steps to start saving for post-retirement life
Here are the initial steps to follow while saving for retirement.
- Create a budget considering daily living costs, housing, healthcare, and others.
- Enable automatic transfers from your account.
- Sign up for the emergency account. It should have 5 to 6 salaries saved for handling emergencies other than retirement.
- Pay off the debt if there is any.
Building net worth by buying life insurance
This is slightly different from the others, as if you pass away suddenly and are unable to work anymore, your family’s net worth will undoubtedly decline dramatically. Think about getting a life insurance retirement plan for them. Remember that it will not help you in retirement but will support your family if things go wrong.