If you are getting ready for retirement or you are already retired, you need to know how to make sure you have enough money to last for your golden years. Depending on your situation, there may be different approaches to attain your retirement goals. With the right planning and preparation, you can ensure you will have enough money. It’s important to not go overboard on spending after you have retired, or you might find yourself facing financial challenges. Here are nine ways to not run out of money in retirement.
1) Don’t Retire Without Enough Savings
Set realistic retirement goals and know how much you need to have a comfortable retirement. You need consider the increased life expectancy rates when calculating how much you need. During the last 30 years, the life expectancy rates for men in the U.S. has climbed from 70 to 79 while the life expectancy for women has gone from 77 to 83. That means the longer your lifespan, the more funds you will need. Experts indicate that to have a lifestyle that is equal to your standard of living before you retire, you should save at least 10 times your annual salary. If you are wondering which salary, that would be your final salary before you leave. Usually, saving at least 15% of your annual income every year should get you what you need, even if you need to reduce your current living expenses a bit to achieve that.
2) Define What Your Retirement Is
You need to decide if retirement to you means that you aren’t working at all or if it includes having a part-time job. Recent studies have determined that there are numerous people who consider themselves to be retired who are still earning an income from part time work. For some people, retirement means working fewer hours or taking sabbaticals or long breaks periodically. If you view your retirement to be like this, it means the money that you have put away for retirement can stay in the retirement account and continue to grow interest for a while longer. You can achieve this kind of retirement a little earlier than you can a full retirement, which involves absolutely no work to bring in additional income. Make the right choice for you and your needs when it comes to how to retire – either ending employment fully or working some hours every week.