While you may have been dreaming of retirement for several years now – it’s a life event that many of us worry about, especially when it comes to managing our finances.
For example, according to a recent study, “a mere 22% of people approaching retirement age believe that they’ll have enough money to maintain a comfortable standard of living.”
Photo by Towfiqu barbhuiya on Unsplash
With that in mind, here are four ways you can prepare yourself financially for your retirement, ensuring your golden years are spent doing the things you love – not worrying about your bank balance.
Sell your business.
If you’ve run a business for several years, deciding what to do with it come retirement is no easy task. However, if you don’t already have some kind of succession plan in place, you may want to consider selling your business. This will provide you with some extra income when heading into retirement while also giving you a chance to hand over your business to the next generation of entrepreneurs.
If you’re curious about the process of selling your business or how much it may be worth, contact The Vant Group M&A Advisors & Business Valuations.
Invest wisely.
There are many different kinds of investments that will help you grow your retirement nest egg. This includes:
- 401ks
- Individual Retirement Account (IRA)
- Annuities
- Bonds
- Real Estate Investments
However, if you’ve never invested before, you must do plenty of research ahead of time to determine which investment opportunities are best for you. After all, while they can be a great way to earn passive income, you should also ensure that you do not invest more money than you can lose – as not all investments pay out in the way we’d hope.
Consider downsizing.
Downsizing to a smaller property can also help you to prepare financially for your retirement, as doing so can lower mortgage and utility payments. This means that you’ll have more money set aside for your future, whether you plan to head out on vacation after vacation or a bit more financial security as you age.
Downsizing also presents you with the opportunity to move to a different town or state – which could provide you with a welcome change of scenery, especially if you’ve always dreamed of moving there but didn’t have the means to do so beforehand.
Take budgeting seriously.
It goes almost without saying that those who are better at budgeting are often more financially secure. This is because they can focus on growing their savings account and keeping their spending in check, while others may be recklessly spending money without realizing they are doing so. As a result, the best thing you can do for yourself (and your future) is to start budgeting.
Write down a list of your monthly expenses, and look into ways to pull them back slightly. For example, canceling subscriptions for services you no longer use (such as streaming sites or gym memberships) could help you save hundreds of dollars – especially when you consider that “42% of consumers forget that they are still paying for a subscription they no longer use.”
Save, save, and save.
Setting up a separate bank account for savings and retirement is another great way to ensure you’re prepared when the big day rolls around – and there’s no better time to start saving than now. For example, if you saved just $20 a week, by the end of the year, you’d have $1,040 set aside. As such, try to save as much as you can each week. Remember, when you put this money into a specific savings account, you can also earn interest on every cent you save. This means it can quickly become a form of passive income.
Ideally, you should also set up a rainy day fund that is separate from your retirement fund. This way, you aren’t cutting into your retirement savings should you find yourself in urgent need of money.
Work with a financial advisor.
Working with a financial advisor could also help you to prepare for retirement, as their knowledge is unparalleled when it comes to saving money or making the most of your assets. While hiring an expert does come as an additional expense, they’ll be able to provide you with invaluable guidance and support, setting you up for a more fruitful retirement in doing so.
For example, they may be able to make you aware of the financial mistakes you are making before they can mess up your bank balance. They can also provide helpful guidance when it comes to investing.