How to Know if Your Retirement Savings Are on Track
The idea of running low on money in retirement is quite terrifying for many of us. Making sure that our funds will not only fulfill our needs but also make life a bit better for those we leave behind is worth the worry, as long as we use that energy for effective planning.
Milestones to Consider
Depending on the experts you follow, there are multiple milestones to consider. For example, by your early 50s, you should have six times your yearly income in savings as per some advisers. If you do not have that much in a retirement fund, your 50s are a time to catch up.
However, if the markets are not poised to help you out in your catching-up phase, there are still options available for you to control your financial life now to help you look forward to retirement.
Know how much you spend each month. This means all the basics, including:
It also includes entertainment. For many retirees, this is the part of the budget that can get out of hand in the early stages of retirement.
Retirement isn’t a vacation, though if you have been looking forward to it for a while it may feel like it. If you are near your 50th birthday, it is time to take a look at expenses and see what you can trim back if it has become excessive. You and your retirement goals are the only parameters for determining what is excessive, so be ready to spend some time on this.
While you are taking a look at your current spending, make sure you also take a look at your future debt. For many of us, the chance to make a bit more money down the road is always out there, but once you retire, those options may be harder to find.
The last decade before retirement is the time to get on top of debt. This may mean:
- downsizing into a more manageable home
- buying instead of leasing a car and paying it off
- moving yearly payments, such as your car insurance, to monthly payments so your budget makes more sense
In your downsizing process, take the time to customize your purchase. If you have always wanted to learn to paint, weave, or any other skill that you have not had time for, look for a home with some studio space. If you love to garden but have had to keep your green thumb under wraps, look for a smaller home with a larger yard or patio.
Get a Little Lopsided
As noted above, retirement is not vacation time. It is a new way of living. Be ready to explore new activities and do your best to keep learning. Some of the biggest investments you can make to enjoy a happy retirement are not fiscal.
Managing family, career and community connections has required you to put many things on hold so you could cover all your requirements. Once your working hours are freed up, you may flounder for a bit. Take that time to learn some new skills, sign up for a new yoga class, or pick up an old hobby.
If that means you spend eight hours a day volunteering at an animal shelter, digging in your yard or starting seeds, so be it. Go ahead and binge on activities that you have always struggled to make time for. Study videos on activities that interest you, and keep learning.
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