Retirement should be a peaceful time when planned. However, scores of people dread the time. They are not sure whether they will keep up with their lives. They also wonder what they will do with the time on their hands.
Retirement planning is vital for everyone. You can be young or old. You need to put everything in order. This will ease your mind. You will get to kick back and rest for the years to come.
Early planning is the way to go. You will get to know of the best ways to save and even invest. People without an income should not be scared. This is because there are numerous opportunities online to make money. Read on to know the best way to approach retirement planning.,
How can you plan for retirement?
There are several ways that you can plan for retirement. It might involve a retirement planner if you wish. A retirement plan will come in handy but again you have to come up with strategies to avoid being caught unawares. Here is how you can plan to retire.
Assess your expenses
You need to have a figure of how much you will spend upon retirement. Knowing your total expenditure will help calculate what you need. What you spend right now will give you a rough estimate. However, when you retire, the cost of living will increase. This is because you might want to travel and visit other places. At this time also, you are susceptible to being sick. There will be medical expenses that will need to be covered. If your retirement plan is to build that dream home, you will need extra income.
Find out how you will cover the expenses
This is now the time to estimate your Social Security benefits. You will also need to check on your savings, annuities, and pension. You can check the pension plan with the human resources manager. It will give you a clear picture of how much you will get. The annuities that you bought will also help you cover costs.
To know the Social Security benefits, you will get the information online on SSA. The online calculator gives exact figures. It will depend on your age and income. The higher the income you get, the more the benefits. An example is when you qualify for $4,000 a month Social Security benefits. A year will give you $48,000. This would total up in your 20-year retirement benefits of $960,000.
Evaluate how much you’ll need to save
First, $45,000 comes from your earnings while $25,000 is from the Social Security benefits. This translates to an inflation rate of 4%. On that account, to get a comfortable retirement, the person has to save $24,000 every year till retirement. Saving is, therefore, necessary to live well in those years.
How much money do you need for retirement?
There are a lot of expenses when you retire. This means that you will need a good amount of money. This will help you lead the life you deserve. For this reason, an example is necessary. According to BLS, workers between the ages of 45 to 54 earn an approximate salary of 53,000. When multiplied by 6 it becomes 318,000. The recommended amount to save is 15% of your salary. You also earn a 7% annual return on the investments. If you have the 318,000 at 50 years it will translate to $1.25 million by the time you are 67.
Depending on your expenses, you might need more or less the amount. You should be free from any loans by then. By doing so, you can get to spend the money peacefully. Retirement planning is therefore beneficial.
How can you invest in retirement?
You can invest for retirement with 401K and also with an Individual Retirement Account (IRA). These two can also make you eligible for Retirement Savings Contribution Credit or the Saver’s Credit. Individuals get an amount of $1,000 as a tax credit. Saver’s credit works hand in hand with the 401K plan and IRA.
The 401K allows you to contribute a significant amount. For instance, if you contribute 4%, it will be the same as your company and 401K which are both at 4%. They both have a corresponding match to your investment. IRA, on the other hand, can help you invest also. You can contribute about $5,000 a year to your account. If you are above 50 years, try an amount of $6,500. These contributions are suitable for moderate and low-income earners.
How can you earn money online?
As retirement nears, you need all the money that you can get. You can switch gears and do forex trading. You only need to open an account with a preferred platform. Then, you can trade a stable amount and the correct time. You can easily make money out of this.
Another option is to publish books. Having a lot of free time will make you focus on writing a book. Authors are highly paid in Amazon hence it is a great idea publishing e-books. You can also become a writer. As you travel, you can jot down a few lines of contents. Writing pays nowadays.
Another way of earning money is through blogging. You can share on social media activities that you do in interesting times. You can be on vacation and decide to share your experiences. People read a lot of content. Hence, you can get paid to write blogs.
As an expert in one field of study, for instance, IT, you can create an online course. This way you can share information for a fee. YouTube is a good platform to do so. Being an expert will make you use your skills to get an extra income. The hours are also flexible. You can decide when and how you want to teach.
When you decide to retire, you need a proper arrangement on how you are going to live. You require all the comfort that you can get. That being so, saving and investing is the best way to plan for retirement. Earning an additional income will also boost the chances of having a standard life. You will be able to pay all the bills and have leisure time. You can visit those places that you’ve always dreamt of.