You might believe that one of the worst ways you can torment yourself is to think about retirement planning. In fact, whenever you hear people talk about the subject, you wince because many of the concepts go over your head. You find it hard to grasp the subtle nuances of high finance. As far as you’re concerned, if you can balance your budget and end up with more money then you’re doing really well.
However, many of the reasons you have for avoiding the topic of retirement planning are based on some false assumptions. Your retirement plan does not have to be complex to work, nor do you need to be financially astute to create a viable plan. And, what’s more, you don’t have to do it alone or read a lot of books or attend seminars. You can get plenty of help from a seasoned financial planner. They can help you understand the financial terms. Together, you can come up with a retirement plan that works for you.
You Don’t Have To Become Financially Literate Overnight
Yes, it’s possible to learn everything you can about how to find the right business or the right investments to build your nest egg, but you’ll probably get stuck in analysis-paralysis. You’ll feel a continuous pressure to come up with the right ideas. It may be far simpler to simply adopt some ideas that are working for people already. It’s not because you’re lazy or lack creative ideas; it’s because you’re busy, and you don’t have time to become an expert in raising capital, allocating funds, calculating changes in interest rates and measuring the efficacy of an investment’s ROI.
Use Proven Ideas
One idea that is working for people as a retirement strategy is using the equity in their home to make up for not tucking away enough saving over the years. It pays to look into a reverse mortgage for a more comfortable retirement.
Here is a clear description in plain language from the government’s consumer information website on how a reverse mortgage works: “If you’re 62 or older – and want money to pay off your mortgage, supplement your income, or pay for healthcare expenses – you may consider a reverse mortgage. It allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills.”
It’s a Different World Now
In the past, planning for retirement was not a big deal. It was a predictable event. You worked for a company for most of your life, then at age 65, the company’s retirement plan and the government’s social security plan would kick in.
After you retired, the only planning you had to do was figure out what hobbies to pick up, where to travel, and how to spend more quality time with your grandchildren.
Retirement was as simple as a lifetime of savings, government social security benefits, and an employer’s pension plan.
The reason retirement doesn’t work this way anymore is because the idea of lifelong employment collapsed as corporations regularly downsized people during economic downturns. In addition, the government’s own financial difficulties (the federal debt is now frozen at $18,112,975,000,000) caused the size of social security checks to fall below the standard of living.
5 Steps To Take Charge
- Talk to a financial planner while you still have a job. They will explain how to do things like sign up for your company’s 401 (k) plan or get a Roth or traditional IRA, as well as offer numerous other ideas on how to plan for your retirement.
- Cut down on your expenses to be able to set aside money to create a savings plan. If you are already living as frugally as you can and still struggling to make ends meet, then think about selling some assets you have to begin to start a savings account.
- At a certain point, you might have enough funds available to use this money to launch an investment portfolio. Simply parking your money into a savings account is not enough because of the low interest paid on these accounts, the rising cost of living, and the negative impact of inflation lowering the value of your money. This is why at some point, you will need to create an aggressive investment portfolio.
- Seek extra income outside your job if you’re under-earning in relation to the rising cost of living. For instance, you can take some college community classes to learn a technical skill and then do contract work for clients.
- If you’re doing well now and don’t need to earn extra income, then get a financial adviser to help you maximize your current earnings and assets. For instance, a financial counselor might be in a position to give you advice on how to buy your next home the right way.
While it’s easier to postpone thinking about retirement planning, the sooner you take action on the 5 steps outlined here, the more time you will have to prepare for a comfortable retirement.