When planning for retirement, financial experts advise retirees will need 70 percent of their pre-retirement income in order to maintain the same lifestyle. While this might sound difficult and unattainable, there are ways to achieve this goal and thrive instead of survive during what is hopefully a long period of retirement. These 10 tips will get anyone started on the road to a financially healthy retirement.
Know the Numbers
The amount of money needed for a financially sound retirement is different for each individual. To find out the right retirement savings amount, a person should:
1. Visit a financial advisor.
2. Use an online financial calculator.
3. Plan ahead; it's better to save "too much" than not enough.
Continue Earning an Income
While most people stop working full-time during their retirement years, that does not mean that their income is completely halted. There are many ways to continue earning an income during retirement without resorting to a 9-to-5 job all over again.
4. Consider alternative sources of income, such as a reverse mortgage. It might be worth connecting with an expert at a reverse mortgage company to discuss specifics for your lifestyle.
5. Turn passions or hobbies into a new career of sorts. Instead of giving away those hand-carved chairs or knitted hats, sell them on consignment.
6. Invest in rental properties. In addition to paying off the mortgage, the income generated from rental units may be enough to provide for the retiree's living expenses.
Use Sound Investment Strategies
The earlier a person starts saving for retirement, the longer those funds have to generate compound interest and grow into a sizable nest egg. As a person approaches retirement age, investment strategies should change to protect that nest egg.
7. Start saving early. Even if it is only a few dollars from each paycheck, workers should pay themselves first.
8. Don't borrow against retirement savings. Borrowing funds from a tax-sheltered IRA could result in fines, and it will take that much longer to restore the savings.
9. Contribute to employee retirement plans, especially if the employer offers any matching savings.
10. Open an individual retirement account (IRA) that best suits your needs.
Even those who are over the age of 50 can save for retirement. It's never too late to start saving. Learning about different investment and savings options and creating an action plan may help boost financial success during a person's retirement years.