A recent poll by Go Banking Rates revealed that 56% of Americans have less than $10,000 saved for retirement. And 28% of Americans aged 55 and older have ZERO saved for retirement. These are numbers that should scare us all. Even if you’re doing great on saving for retirement, those who aren’t saving will eventually be a tax burden on the savers if they continue to avoid a retirement savings plan.
With health problems on the rise and medical costs on the rise, people are in dire need of a plan to start saving at least something for retirement. And lest you be discouraged, know that “something” really does add up.
In my mom’s case for instance, she didn’t work until she was 35. She never made more than $17 an hour but was able to sock away about $35,000 in retirement savings on her smaller salary and shorter working time. She gained another $40k or so when she and her hubby sold her house (they keep their monies separate) and is living a comfortable life by budgeting and watching her spending.
Every dime you can save for retirement adds up and it’s never too late to start. Here are ten things you can do that will help you prepare for retirement and not be one of the millions of Americans with no retirement savings.
How to Prepare for Retirement
1. Estimate How Much Money You’ll Need
There are many online calculators that can help you estimate how much money you’ll need for retirement. When calculating the amount, be generous but not gluttonish when figuring out expenses. After you’ve calculated, don’t panic; I know the number may be higher than you expected. The point is that now you know how much you’d like to have and you can start building a plan from there.
2. Make a Plan to Pay Off Debt
Less debt means less expenses, both now and in retirement. Make a plan to start budgeting your money and living below your means, putting all extra funds toward debt payoff. The sooner you get rid of your debt, the more financial peace you’ll have and the better prepared you’ll be for retirement.
Check out this series to help you create a solid plan for getting out of debt
Recommended Reading: Love Your Life, Not Theirs: 7 Money Habits for Living the Life You Want
3. Contribute Money to Your Workplace 401(k) Plan
If your employer offers a 401(k) program, start contributing, or increase your contributions if you need to. Be sure to pick your investment choices based on your risk tolerance and how close you are to retirement age. Younger peeps can afford to take more risk (as long as they’re comfy with that) whereas older folks need to choose lower risk investment options.
If you’re unsure which 401(k) investment options to choose, ask a financially savvy friend or family member, or use workplace resources for helping you choose if they’re available.
4. Open an IRA
It’s always a good idea to have your retirement eggs in a variety of baskets. Adults can contribute up to $5500 per year to either a Traditional IRA, a Roth IRA or a combo of the two. If you’re over age fifty, you can contribute up to $6500 per year. Check out local banks or online banks for current IRA rates.
6. If You’re Older, Start Considering Post-Retirement Living Arrangements
If you’re over forty, it might be a good idea to start working on a post-retirement living arrangement plan. Where do you want to live after you retire?
- In your current home
- In a 55+ apartment complex
- With family members
- In an out-of-state home
There are many options available. Ask yourself: Will you want to move to a warmer climate? Will you want to be close to kids and grandkids? Start thinking about these things now so you can better determine post-retirement housing costs. For instance, a post-retirement home in Arizona or Florida might seem nice, but a post-retirement home in Arkansas might be more cost-effective.
Start searching to get an idea of which areas and which housing options best fit into your current post-retirement plan.
7. Start Investing in Your Health
Now is the time to take control of your health so that health-related problems have less of a chance of ruining your retirement plans and running you financially dry. Consider these tips for improving your health and reducing the cost of healthcare for yourself, both now and later.
- Start eating less processed foods and start eating more whole foods such as fresh vegetables and fruits, lean meats and healthy grains such as organic brown rice.
- Increase your daily activity. Go for daily walks with a loved one. Practice a daily stretching routine. Lift free weights. Take an exercise class that fits in with your interests. Use an at-home DVD or cable TV workout program. Even if you’re new to exercise, short, light exercises will help and you’ll be able to build up to doing more within a short time.
- Work to reverse health conditions that require medication by eating better and exercising. When the doc says it’s okay, reduce or eliminate the medication.Type 2 Diabetes and Heart Disease are examples of health conditions that can sometimes be reversed by switching to a whole foods diet and beginning a light exercise program.
- Minimize alcohol consumption. Light alcohol consumption (for instance, 1 glass of wine a day) has been shown to have some health benefits, but less is definitely better when it comes to long-term health.
- Get enough sleep. Sleep is very healing. Try to get at least 7 to 8 hours of quality sleep each night.
- Reduce or eliminate stressors in your life. If something or someone is causing you major stress, work to change the situation. This might mean switching jobs, switching friends or getting professional counseling for unhealthy relationships.
8. Get Rid of Your Mortgage
Pay off your mortgage or consider selling or renting in order to reduce housing costs. If you’re mortgage free but own a home, you’ve got the added benefit of having the equity in your home available for retirement expense usage if necessary. If you’re selling your home to move to a rental, put all available equity in savings as a cushion.
9. Consider Investing in Real Estate
Real estate income can be a great source of post-retirement income. Consider educating yourself on real estate investing to see if it might be a good source of post-retirement income for you.
A Good Book for Beginners Interested in Real Estate Investing: The Book on Rental Property Investing: How to Create Wealth and Passive Income Through Intelligent Buy & Hold Real Estate Investing!
With real estate investing, you’ve got the monthly income from renters, as well as the equity that’s building up in your rental property with each passing month.
10. Review Your Insurance Needs
Insurance needs will likely change in retirement. Your employer may or may not offer a post-retirement insurance plan. If you served in the military, you may be eligible for health insurance through the VA. As you draw nearer to retirement, start making a plan for both health and life insurance needs by determining what plans are available for you and what they will cost you on an annual basis in retirement years.
Just by reading this post you’ve taken one step toward creating comfortable retirement years. Keep up the good work!
How do you feel about your retirement plan? Which areas would you like to be better prepared in?
*See the full Go Banking Rates Retirement article by clicking here.