- Create a Budget Based on Your New Income
If you are possibly like most persons, you despise the notion of making a budget-remember that at this stage of your life, budgeting must be priority. A budget is however a plan made purposely for your financial future. Budgeting helps you to project what will happen with your money
If you’re like most people, you don’t like the idea of a budget, but at this stage of your life, a budget is really just a plan for your financial future. It’s a way of projecting what will happen with your earnings (money), and it is the best way to avoid serious problems after you retire.
Your monthly expenses will change when you retire. All work-related benefits such as transportation to work, clothe allowances, free lunch, et’al) will cease. However, as your age increases, your expenses increase as well. Considering your age when you retire, health insurance may cover many of your medical bills but not all. You may definitely want to subscribe to one of the supplemental plans that are available.
- Make savings a fundamental priority – Many people do not save enough before retirement. Research shows that you have eight times your annual salary saved by the time you reach the age of 60. This suggest that even if it means sacrificing, now is the right time to do everything in your power to save. My advice is for you to consider a part-time job which will bring in extra income. Giving up weekends and days off is tough but becomes more tougher when you retire without sufficient income
- Estimate How Much Retirement Income you’ll accrue
While we all look forward to not having to show up for work, let’s face it, we will miss the paycheck as well. That’s why it is very important to estimate how much income you will have in your retirement period.
For many retirees, Social Security is a major element of their retirement income although it was never meant to be the sole source of a retiree’s income, many try to live on Social Security alone.
To estimate how much, you will receive from Social Security, you can visit the Social Security and National Insurance Trust (SSNIT) to for them to calculate your contributions and estimate how much you are going to earn after retirement. You will be asked a few questions including how much you made last year. It will however interest you to know that all these estimates and inquiries can be made online as well.
The question you need to ask yourself is will I have any pension benefits coming your way? If so, you will therefore be required to find out how much you will receive and the requirements needed to enable you begin receiving benefits.
Fast forward, you will need to estimate how much your retirement and savings accounts can provide each year.
As a general rule applies, financial advisors say that you can expect to take 4 percent of your invested assets each year without it being depleted. Other planners have got different sophisticated formulae but the 4 percent estimate is good enough for pre-retirement figure.
- Decide When You’ll Begin Taking Social Security For most of us, social security is the major part of our monthly income during retirement. You can begin to receive your contribution when you reach age 62 but you may choose to delay it at your own desire age, let’s say 70. WHY SHOULD I DELAY? The longer you wait the bigger your monthly checks will be- the reduction is always greater when you begin benefits before you reach your full retirement age. The knowledge of when to begin collecting social security benefit is not an exact science. It mostly depends on whether you will be in need of the income right away and how long you expect to live. If you are within 4 years of pension, it is advisable to use this tool because it can help you maximize the amount you receive.
- Get Out of Debt
Debt is a dream killer if you are on a fixed income. Credit card minimum payments, auto loans, student loans, and mortgages all take the first salary you earn each month. You must pay them no matter how tight your budget is and more to the point loans will be deducted from source.
Chances are that income after retirement will drop and maybe by a big amount. If you’re unable to repay those debts now before you retire, what chance will you’ve got after you retire?
It is very advisable to do whatever it takes within your jurisdiction to repay any debts before you retire you therefore need to set-up a supplementary business for yourself or even take on a second part-time job.
- Prepare for Lifestyle Changes
one of the big events in your life is retiring- and just like you made plans for your marriage ceremony, you need to plan now before retirement.
You are going to make a lot of decisions on where to live, whether to work how to spend your leisure, to set up a business, etc. I know you might have been thinking about these questions for a long time now. This is the right time to find answers.