Are you in your 30s or 40s? Have you started with the financial preparations for your retirement?
If so, now is the right time to start making some major financial decisions. Begin by making a plan for things like investment planning, asset allocation, assessment of the cost of living (current and future), health care expenses. By doing this, you can make sure that you are well prepared and provided for in your retirement. Here are 6 dos and don’ts for a successful retirement.
Do’s for a Successful Retirement
1) Invest in pension accounts like the 401k and IRA pen
Both 401k and Roth IRA are tax-qualified pension accounts regulated by the Internal Revenue Code. With these pension accounts, you get the benefit of saving a portion of your monthly salary towards retirement without having to pay tax on it. Also, sometimes, employers will provide matching funds towards your 401k.
2) Take care of your health right from a young age
This is something that can save you a ton of money when you’re older and/or retired. Many people, no matter how healthy their retirement savings are, lose a lot of money due to health-related expenses. They are always paying hospital bills, buying expensive orthopedic equipment, etc. The good news is, it is possible to stay healthy during retirement years by taking care of your body right from a young age.
3) Constantly create new goals and stay motivated
It is very common for retired people to suffer from psychological disorders like depression. Leaving a career you may have been doing for your entire adult life is not easy. So, create new goals or find a new hobby or interest and do what you can to keep up with it. Staying active is a great way to ensure your retirement is happy and healthy.
Don’ts for a Successful Retirement
1) Do not ignore health care expenses
Even if you were fit and healthy throughout your younger years, there are still some healthcare costs that you can’t avoid. Life is unpredictable. You don’t know when an accident could occur or you could catch some unknown virus. According to Fidelity, an average American couple spends approximately $285,000 on healthcare costs in their life. If you feel confident you have saved enough prior to retirement, that’s wonderful! But if not, make sure you have a plan B in place for unexpected expenses.
2) Don’t ignore tax credits and deductions
Every year, the relevant authorities in the government agencies sit down together to make the tax rules for the upcoming years. Tax reform takes place every year. New laws are jotted down to increase the amount an average taxpayer saves for his/her retirement. Always expand your knowledge on how you can avoid paying tax on the money you earn and stay in the loop by reading blogs such as this one.
3) Do not quit your job too early
Many people have made the mistake of leaving their career too early without the proper preparation or funds. While early retirement works very well for some, it is only when sufficient assets are available. Just because it seems like a good time to walk away doesn’t mean that is the case. If you are considering early retirement, consult a financial planner and ask them to audit all of your financial accounts.
Unfortunately, there is not a “one-size-fits-all” instruction booklet for retirement. Everyone, including you, will or has made mistakes. The road is not easy but as long as you learn from your mistakes and do your best to be prepared, you will be just fine.