Your Guide to Preparation for Retirement

Retirement can be a time of enjoyment and discovery, but only if you’re ready for it. People who don’t prepare for retirement risk facing severe financial hardships and may have to work a lot longer than desired. This guide provides tips on retirement preparation to help ensure you’re poised to truly enjoy this time of your life. 

Making a Plan for Retirement

A couple making a plans for Retirement with an advisor

The first step toward preparation for retirement is to make a plan. Spend some time thinking about what retirement means to you and what you want to do when you don’t have to work every day. You can outline a plan by working through these steps.

Identify Your Retirement Goals

Everyone has different dreams for their retirement. You may want to stay in your home and continue life as usual but take up a few new hobbies like writing a screenplay, gardening, or joining a club. You may alternatively want to liquidate your assets and tour the world on a boat or an RV. You may instead want to move to a retirement community or in a grandparent’s flat at your children’s home. 

Create a Retirement Budget

You need to decide how you’ll pay for your retirement once you determine how you want to spend your time. Try to sketch out a proposed budget for how much money you will need for your retirement lifestyle based on today’s cost of living, then use an inflation calculation to estimate how much that translates to in future dollars. 

Commit to Starting Early

The earlier you start preparing for retirement, the more easily you will be able to reach your goals. You should start saving now, regardless of your age. People who start young have time to amass significantly more money in their retirement accounts. Don’t despair if you’re starting later, though, because it’s never too late to start saving. 

Your retirement doesn’t have to look like anyone else’s dream – you get to choose what you want at this time of your life. You ultimately may have to adjust your goals to work with your budget, but going through this process is critical if you want to be prepared for retirement.

Executing Your Retirement Plan

a person executing their retirement plans

You’ve made a plan and identified the importance of starting to save, but now you have to identify ways to execute your plan. Keep these tips in mind:

Don’t Just Save, Invest

Saving is not an adequate strategy for retirement preparation. It’s wise to invest your funds instead. Saving money under your mattress, or even in a low-interest savings account, is fine for short-term emergencies, but it is not an effective long-term strategy. 

Funds saved in this way are not growing, and as inflation occurs, they actually lose value. You instead need to invest. Investing allows you to place your money into vehicles that help it grow. 

Invest Strategically

You need to invest strategically, and in most situations, this doesn’t mean day trading or handpicking stocks. You should instead work with an advisor who can steer you toward the best investments based on your long-term and retirement goals. 

Enroll in Employee Retirement Plans

The retirement plans offered by most employers are typically more effective than many other retirement investment options. Talk with your employer about whether they offer a 401(k), a pension plan, or another type of help with preparation for retirement. Some employers even provide financial wellness programs that help you prepare for retirement.

You should always contribute at least up to the employer match on the 401(k) account, even if you don’t participate in any of their other retirement programs. An employer match gives you a 100% return on your investment, and you also get to enjoy the funds’ growth while in your account. 

Consider Delaying Your Social Security Benefits

Your Social Security benefits are based on your average earnings during your career, and you can opt to take these at your full retirement age or during a window before or after your full retirement age. People born between 1943 and 1954 have a full retirement age of 66; those born between 1955 and 1959 have full retirement ages between 66 and two months and 66 and 10 months; and people born in 1960 or later have a full retirement age of 67. 

You receive the total amount of your retirement benefits at your full retirement age. You can start taking Social Security benefits as early as age 62, but they will not be your full amount. People who wait until they are 70 can receive up to 32% more than their full retirement benefit, but your benefit will not increase if you wait beyond this age.

Sign Up for Medicare ASAP

Waiting for Social Security can help your finances, but you shouldn’t wait to sign up for Medicare. You are eligible three months before or after your 65th birthday, and you need to sign up as soon as possible because people who enter the program late face a penalty on their premiums. 

You may also be able to get on Medicare Advantage or supplement plans without having a health screening during the open enrollment period. Switching plans after this point, however, typically means your health will be taken into account, so choose your supplemental plans carefully to ensure you don’t choose too little coverage in exchange for saving a little money on premiums upfront. 

Preparation for retirement has a lot of different elements, and ultimately, the right steps vary based on your unique financial goals, your income, your wealth, and what you want to preserve for future generations. It’s a good idea to work with a specialist to maximize your returns.

Couple enrolling a retirement plan

Contact Bogart Wealth to Talk About Retirement Planning Today

Preparation for retirement is challenging, given the ever-changing landscape of the economy and the available investment options. Bogart Wealth offers a range of independent financial advice for retirees, individuals, families, and more, and we would love to help you with your retirement planning. Contact our team today to talk with an investment professional about your financial goals and how we can help you reach them.

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