Whether you’re ready for it or not, retirement is coming. Statistics show that Americans are woefully unprepared for retirement — at least in the financial sense. Americans ages 55-64 have only saved 12 percentof what they need for retirement, on average. It’s suggested that young people squirrel away at least two decades worth of income, given the 18-year average for retirement. The number one worry of working-aged Americans is that they won’t have enough saved.
Overall, American retirement preparedness is in a sorry state.
Of course, a solid financial plan for retirement is only part of the picture. Retirement is more than having enough money saved. Whether you have retirement on the mind or you’re still decades away, we can all benefit from retirement planning and preparedness.
Here’s a streamlined list of absolute essentialsbefore you retire.
Your Essential Retirement Preparedness Checklist
Financial
Take Inventory
Before you make any big financial decision or life change, you must take stock of your assets. Knowing where you stand financially will help you prepare for retirement, knowing what is at your disposal and what liabilities remain. When you sort out these details, keep track of things like incoming and outgoing funds, savings and retirement accounts, investment, debts, and assets like property and vehicles.
You also want to be clear on all of your insurance policies — what they cover and how much they cost.
Once you know where you are now, you can more accurately project where you need to be. Will you be receiving a pension or passive income to support your retirement, or will you rely solely on savings? How will your budget need to adapt and adjust?
Set Aside for Your Emergency Fund
Just about everyone knows that they should have money set aside in case the unexpected happens. Illness, accident, natural disaster, robberies and unexpected repairs...the list goes on! These things couldhappen, though we hope that they never do. While it’s common sense to have this provision, knowing that so many Americans are underprepared with their savings means that they struggle to deal with unexpected costs, too. In fact, most Americans (63 percent) would struggle to cover a $500 emergency.
Start putting your emergency fund together now. Prioritize it! Don’t let a financial burden strain your family in the midst of crisis.
Ready the Estate
If you’re like most people, you are uncomfortable with the idea of composing your will and setting your affairs in order in the event of your death. As retirement gets closer, however, our own mortality becomes more and more apparent. Now is the time to sort out your estate. Consult an estate planner that you trust.
It’s not just about your will, though. Think about things like who will have power of attorney, who can make medical decisions on your behalf. What are your end-of-life wishes? Make it easier on you and your family by deciding these things now, when you are healthy and able. It might mean granting account access to a trusted family member or added trusted individuals to your safety deposit box access.
Get Investing
I’m going to keep this one short and sweet. You all know that my family has owned and operated REI Nation, a turnkey real estate investment company, for some fifteen years. I’m proud to be on the team. Because of this, I know personally just how important investing is in a stable and fulfilling retirement. If you haven’t begun to invest, start thinking about it now.
Naturally, I suggest passive real estate investment.This is because, as you head towards retirement, you want to benefit both from passive income as well as experienced teams who will operate and maintain your properties worry and hassle-free!
Personal
What You Want to Do
What do you want to do with your retirement? The traditional age of retirement is 65, but people may retire several years earlier. With the average retirement lasting 18 years, how do you intend to fill that time? Some people, after all, retire and then regret it.
Once you have the fiscal side of retirement taken care of, consider your own personal desires. Do you want to keep working, maybe at a part-time job? Do you want to pursue hobbies more completely? What do you want to see and experience?
How you want to live and what you want to do go hand-in-hand. Do you want to travel? Experience new things? These will cost money. If you know how you want to spend your retirement, you will be better equipped to prepare financially.
Where You Want to Be
Plenty of people decide to move when they retire. Where do you want to spend your golden years? You don’t have to flock to Florida — just consider where you want to be. It may be a destination city, it may be closer to family, it may be where this is a great view or downsizing in the same city. Regardless, it’s important to think about it. Real estate transactions and moving are costly ventures.
Consider and prepare for the cost of living where you want to be when you retire. You might find that your savings stretch further (or not so far) depending on where you end up!
Prepping for retirement? Share your tips in the comments.