If you want to be worth gold in your golden years, you need some advanced planning. Unless you’re independently wealthy or you just won the lottery, living a luxury-filled retirement is a goal that requires work and financial literacy throughout your career.
All of the hard work you do now will pay off once you hang up your spurs. Here are six tips for making that luxury-filled retirement a reality.
Plan for the future
Not everyone defines luxury as a mansion beside a golf course. Some might aspire to that vision, but others may want to travel the world. Others still may daydream about relaxing on the beach, or they might use their newfound freedom to volunteer for a nonprofit organization. Richness has a spiritual component as well as a financial one. Decide what “luxury-filled” retirement means to you.
Exploring what your retirement goals look like is your first step to budgeting and laying your foundation. You should also look ahead to what you want for your estate after you’re gone. Estate planning is an involved legal process, and getting a head start ensures you squeeze every second of fun-filled memories out of your retirement years. Established law firms like wh Law can help you draft an estate plan that works for you.
Find your number
Understand that your retirement funds will need to last you for twenty, thirty, or even forty years. The rule is to budget four percent of your retirement stash per year to stretch your funds. There are many different online retirement calculators available on the Internet. This resource from AARP is accurate and easy to use.
Knowing your retirement wish list items and what they cost will help you find that magic number. Use a retirement calculator to determine the savings rate and return on investment you’ll need to support the retirement you want.
Any retirement planning should weigh your risk tolerance against the goals you want to achieve. Growing your retirement fund necessitates a certain amount of risk because bank accounts and certificates of deposit pay very little interest.
In your younger years, you should be able to tolerate higher levels of risk since you’ll have time to make up for any losses. As retirement nears and after retirement starts, investments should be more conservative.
This tip may sound like going back to work, but in retirement, you can make your retirement fund work for you by providing you with dividend income. Moving from asset accumulation to income generation through dividends is a practical move as you near retirement. That way, your retirement fund can keep growing as you spend it.
Deal with debt
Your retirement funds will go further if they aren’t weighted down by old debts. If you carry credit card balances, pay those off. Are you living in the house you’d like to retire in? Do everything you can to pay off that mortgage. Fewer bills to pay means more money to devote to happier pursuits.
Retiring in luxury – whether you define luxury in material terms, as experiences, or as freedom – can be achieved with concrete goals and advanced planning. You don’t want silver or bronze years, so start saving now to secure your days in the sun.