The kids might be gone, but the bills and expenses are still there. You’ve done everything you can to make sure your children have a good life. Now it’s your turn so here are some tips to help you prepare for retirement now that the kids are gone.
Reconfigure Your Monthly Budget
It’s time to take a second look at your monthly budget. Your post-retirement expenses will probably change significantly and now’s the time to deal with it while you still have income coming in.
Develop a new budget that includes both ongoing expenses as well as “one-offs.” It’s important to manage your finances in such a way so as to minimize your discretionary spending. Right now, you’ll want to go on a spending spree. But, if you’ve been taking care of your kids for the last 18 or 20 years, what you need to do now is focus on your own future.
According to Money Looms, a 401(k) is one of the best ways to get started saving if you haven’t been doing a very good job up to this point. Most employers will give you $0.50 for every $1 that you contribute to the plan. Some companies pay less, but most match you with something.
Another thing to look at is your debts.
Pay Off All Debts
As a general rule, you should try to pay off all of your debts as quickly as you can. Do not go into retirement with a significant debt load.
Mortgages don’t necessarily have to be paid off if you plan on buying a reverse mortgage, but all other debts should be – and your mortgage should be if you don’t plan on getting a reverse mortgage.
In fact, you should also consider downsizing if you can. Don’t wait like most people do. It’s tempting to keep the house you raised your children in. But, the truth is, it’s probably way too much house for you now.
Sell it, and move into a smaller place. If you’ve got a 4 bedroom home, downsizing to a 1 bedroom might seem like a huge jump. But, it’s going to save you a lot of money. Depending on how much money you have left on your current home mortgage, you might be able to cash out and buy your next home free and clear.
Monitor Your 401(k)
Keep and eye on your 401(k). Now is the time to up your savings contributions and dial back the risk. Most people do the exact opposite. But, if you lose money now due to a stock market correction, odds are you’re not going to make it back inside of 10 years, and you’ll have to delay your retirement another 5 to 10 years – probably longer.
Balanced funds, target-date funds, and a more conservative investment allocation of 60 percent bonds and 40 percent stocks will probably work out well.
However, you should contact a professional financial advisor to see what specific funds make sense, as well as the specific allocation given your age and income goals at retirement.
Consider a Second Job or Career
You don’t have to fully retire at age 65 or 70. If you want to work into your 80s, don’t be afraid to do so. Realize that you might be able to (physically) or your employer might want to push you to retire. But, there are lots of jobs out there for seniors.
Boost Your Savings
Ramp up your savings. If you’re not saving at least 25 percent of your income, now is the time to do that. It might seem like a lot, but you need it. Once you hit 25 percent of your income, try to squeeze another 25 percent out of your income for savings.
Allen Foster has been involved in financial consultancy for a number of years. He likes to offer his views and ideas on this subject to a wider audience online. His thoughts on financial matters have been published across a diverse range of sites.