10 Signs That Say You’re Not Yet Ready For Retirement
Retiring is not that easy. It takes careful investment planning, budgeting, controlling debt, and most of all, being prepared. Do you think you think you’re secure enough for your own retirement? If you’re having doubts, check out these 10 signs to determine whether you’re ready or not for life’s next big step.
1.You’re Struggling To Pay Current Bills
If you’re currently living from paycheck to paycheck, or if your earnings cannot cover all your monthly expenses, then you obviously do not have much to spare for your savings retirement.
The rule of thumb is that an estimated 75% of a person’s income before retirement is needed in order to ensure safety. Sources of this income include your pension, Social Security, healthcare insurance, individual retirement accounts (IRAs), etc.
2.High Level Of Debt
In order to fully enjoy a stress-free retirement without having to think about monthly installments or credit cards, you should start paying off your debts. These are often money owed from the mortgage, student loans, refinance home loans, and other similar transactions. By eliminating these debts, you are also preventing interest payments from eating up your savings for retirement.
3.You Have No Plan For Future Major Expenses
Financial advisors suggest not to wait until retirement before making huge expenses or purchases that can easily be anticipated beforehand. These include purchasing your dream car, moving into a house of your own, or roof repair. Expenses like this stack up quickly and can affect your portfolio and retirement funds.
4.An Unknown Social Security Benefit
It is advised by financial advisors once again to hold off retirement until you are allowed to gain your maximum monthly benefit from Social Security. If you wait long enough, you will be able to grow your retirement income more because your earnings will be added to your benefit calculation. Easy!
5.No Monthly Financial Plan
Even after retirement, your expenses will still remain. This is why it is advisable that you foresee your expenses and track monthly spending before retirement so that you can be better prepared and make the necessary adjustments. Creating a monthly plan indicates that you have control over your money and that you can still live comfortably off your retirement money.
6.No Long-Term Financial Plan
It is important to consider how much you can spend in the coming years and how you can sustain that level in order to stretch out your retirement savings. Generally speaking, one’s retirement plan should cover for at least 30 years. Find out what spending percentage works for you and calculate how much you’ll need to save for your retirement! If you’re unsure, get professional aid from financial advisors.
7.Not Accounting For Inflation
Most people do not take into account the effects of inflation and how much it can change the value of money over the years. In essence, it affects daily expenses and your overall financial savings in the long run. For this reason, you need to be wiser with spending and saving so that you’ll be financially secure for the rest of your retirement.
8.Not Rebalancing Your Portfolio
If you used to take investments for granted, now’s the time to change your attitude! As you grow closer to retirement, it is ideal to rebalance your portfolio per year in order to protect your assets and at the same time, generate more income. Steps included in the management of your portfolio include diversifying assets, gaining more income, protecting your capital, and not falling for financial risks. When markets decline, your portfolio does not suffer a loss if you are well-rounded in your investments such as technology, business, healthcare, and other investment options.
9.Retirement Worries You
More than careful planning and securing finances, your heart and mind should also be prepared for retirement. For some people, it is hard to let go of the work grind and the routine that comes with it. This could cause fear and worry to a certain degree. Instead of worrying about what to do with all your free time, try looking for new hobbies to enjoy. If you want, you can also consider looking for part-time work that can help you with post-retirement income.
10.You Still Love Your Job
No one’s stopping you if you still want to carry on working well after retirement age! Some people still get excited and happy going to work daily, even if they no longer have to. If you’re one of those people, then, by all means, continue doing it! Other than being a source of income, jobs give people reason to be socially active, helps boost the mind, and gives purpose. These contribute to your overall well-being and sense of self.
At the end of the day, retirement is a major life decision and a future investment that needs careful consideration. Take your time and choose your options wisely!
Based on materials from Investopedia.com