Make the Most of Your Last Decade Before Retirement
Here are a few things you can be focusing on as you make your way to the finish line of your working years.
One of the first things that you should do as you approach retirement is to start tracking your personal expenses in greater detail. You should be tracking your monthly living expenses to get a better understanding of what it is you actually spend. This can give you a better idea of what you will need to live on in the future. However, there are obvious things that will change once you do retire. Some of the expenses that will likely reduce can include cost related to raising your children, paying your mortgage, and job-related costs. However, you may experience a rise in health insurance and other costs that should be considered as well.
Another way to prepare for retirement is to change your spending habits today. When you are looking to prepare for retirement, you should start spending like you would in the future. Since you may need to cut back on your spending once you lose your income, you may as well start living that lifestyle now. This could make it easier for you to transition to retirement when the time comes.
Improve Savings Rate
Once you are in your last ten to fifteen years of your career, you should be trying to save as much money as possible. Ideally, you should take advantage of the𧊑k maximum contribution limits, including the catch-up benefit, as well as maxing out IRA contributions. At a minimum, you should be saving at least 20% of your net income. If you are able to cut back on some of your expenses, the additional money that you save should go into a savings and investment account. While it may seem too late at this point to start saving more, the changes you make today will have a big impact in the future.
Understand Your Benefits
When you are preparing for retirement during the last decade of your career, you should also spend time to better understand your other retirement benefits. Most people will have some other form of income that they can rely on when they are in retirement. Some of the most common types of benefits include pensions and social security benefits. You should make sure that you fully understand what your benefit will be based on the date in which you retire. This can help you to better build a budget and determine what the right retirement date will be for you.
Additional Income Sources
As you prepare for retirement, you should also consider other ways that you can earn some additional income. While you may look forward to quitting your full-time job and enjoying your life, it may still make sense to look for other ways to earn somebody some passive income. Some great ways to do this can include turning a hobby into a source of income, investing in a real estate investment property, or even getting a part-time job consulting in your field. This can not only help you to earn some additional income, but can keep you sharp as well.
Consider Investment Strategy
During your last few years of your career, making the right investment choices is very important. In many cases, the natural decision is to try and invest as conservatively as possible. While this can help to protect your assets, it is not always the best choice. Your investments in retirement should include investments in growth stocks, dividend paying stocks, and conservative blue-chip stocks. These investments will grow in value over time and provide you with some additional dividend cash flow. As long as your investments are properly diversified and that you do not panic sell, you will see your investments increase back in value even if there is a stock market correction.
This content created by David Gaylor in conjunction with Fusion Capital Management.
Questions? Comments? Ask David!
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by radical promoting and their editorial staff based on the original articles written by jeff cutter in the falmouth enterprise. This article has been rewritten for David Gaylorand the readers of David's Family Finance. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.