Retirees deserve to kick up their feet and revel in the product of their hard work. This task may seem impossible if you think you don't have enough money saved up. Fortunately, there are ways to safeguard your future as much as possible. If you're a future retiree, read this guide on how to best build your nest egg before retirement so that you're ready for whatever comes your way.
Cancel Unnecessary Expenses and Investments
People, there is no need to buy a sports car during a mid-life crisis. Chances are you'll look silly, and these vehicles aren't a good investment. In fact, it's best to cancel all your unnecessary expenses and investments the minute you start to think about retiring. The more money you save from ending bad investments, the more money you'll have for the future.
Other examples of common bad investments include:
- Timeshares: Timeshares can cause financial problems like a lower credit score and possible foreclosure. As a result, it's best to stay away from these shared vacation properties.
- Specialized collections: Some individuals collect baseball cards or stamps in the hopes that they will be worth something in the future. Often, people end up losing more money than they make.
Cut unnecessary expenses. How many streaming services and cable channels do you have? How much do you spend on eating out? Even small cuts in spending can go a long way.
Save a Little at a Time
Another tip on how to best build your nest egg is to save a little at a time. Hopefully, you are already contributing to your employer's 401(k) or another retirement account. Consider setting aside an additional small amount from each paycheck so that you can use that money down the line. You won't believe how fast the numbers accumulate, and you'll see that small changes make a significant difference.
Speak to an Expert
Setting a retirement budget can be challenging, so there's no reason you have to do it alone. Think about talking to financial experts who can help you plan for the unexpected. These professionals will take a look at where you stand to help you set realistic goals for retirement. Don't be ashamed of asking for help.
Plan for Future Health Care Expenses
If you have money in a Health Savings Account, continue to contribute to it. The pre-tax money in this account grows tax-deferred and the proceeds come out tax-free if used for health-related expenses, including deductibles and Long-Term Care Insurance premiums.
Once you get to age 65, you will have Medicare for your health insurance; however, since Medicare has substantial deductibles, most people will purchase a supplement to cover those deductibles. But Medicare, like the health insurance you now have in place, will only pay a fraction of the future long-term health care you may need as you get older.
Consider looking into Long-Term Care Insurance before you retire to cover the costs, and the related family burden will come from your future care.
The current climate has shown us all that we must be ready for anything. Unexpected events like sudden market corrections and the current virus crisis can adversely impact your assets. It's essential to have a nest egg so that nothing unexpected ruins your plans. These tips should help you feel a little more financially secure before you leave the workforce.
About the Author
Mallory Knee is a freelance writer for multiple online publications where she can showcase her affinity for all things beauty and fashion. She particularly enjoys writing for communities of passionate women who come together for a shared interest and empower one another in the process. In her free time, you can find Mallory trying a fun new dinner recipe, practicing calligraphy, or hanging out with her family.
Contributor since September 25th, 2020
One of the biggest concerns once you retire is the costs and related burdens of long-term care. The problem of long-term care is both a cash flow issue and a family issue.
Preparing your family and finances for the financial costs and burdens associated with long-term health care is key to enjoying a successful future retirement. However, it would help if you started preparing before you retire as your nest egg could quickly disappear or be reduced substantially, adversely impacting lifestyle and legacy.
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