7 Steps You Need to Take to Retire Happier
Struggling to reach a point at which you feel comfortable with your retirement plans? Is retirement age approaching, and fears of financial solidity still loom large?
It’s not uncommon, but as Walter Updegrave says, “Financial readiness trumps age. Many of us believe the trigger to retiring is hitting a certain age, whether it’s 62, when we become eligible for Social Security; 65, the age for signing up for Medicare; or 66, when Baby Boomers qualify for full Social Security benefits. But the rich known that age isn’t what matters most.”
Those thoughts are echoed by UBS. “Age 65. It used to be the trigger for retirement. And for many investors, age is still important. But most wealthy investors are focused on achieving financial well-being before they retire.”
Take a cue from these authorities – it’s possible to retire happier when you take the right steps during your financial planning and retirement preparation. It’s not about reaching a certain age. It’s about ensuring that you have a healthy financial future to look forward to even after you’ve retired.
Boost Retirement Savings
Financial security is perhaps the single most important key to being able to retire happier. However, too many of us have misjudged our needs when it comes to money in retirement.
Whether you started saving late, or find that your calculations were more than a little off, you can boost retirement savings now to ensure that you’re happier in your golden years. Leverage all the tools at your disposal, including retirement accounts, the stock market, and bonds.
Postpone Taking Social Security
Think that taking Social Security as soon as you’re eligible is the best way to get on with your life? It might be a relief at the time, but understand you’re sacrificing a lot for the chance to retire just a few years early.
Waiting until you reach full retirement age ensures that you’re able to qualify for full Social Security benefits, rather than only partial benefits. For instance, if you were eligible for $1500 per month at age 67, waiting just three more years would qualify you for $1860 per month.
Create Extra Retirement Income
Entering retirement doesn’t have to mean the end of your income, and being forced to live off only your savings. There are plenty of ways you can create extra retirement income.
You could take the chance to start that business you’ve always dreamed of. You could start renting out your second home. You can even build passive income streams through creating bond ladders.
Reduce Retirement Expenses
One key to ensuring retirement happiness is to reduce the expenses that you’ll incur after you quit your day job. The less money you owe to others, the more you can keep for yourself and your family.
You’ll find a host of expenses that could be eliminated or paid down significantly before you retire, including:
- Pay off or dramatically pay down your mortgage
- Pay off credit card debt
- Stop paying student loan debt for your kids
- Pay off your auto loan
Do you really need two vehicles? Would you be better served by downsizing your home now, rather than later? Are you putting too much of your money in taxable accounts? These are just a few ways you can reduce your expenses.
Employ an Asset Dedication Investment Approach
Are you following a traditional asset-allocation investment approach? If so, you could be accidentally hamstringing your ability to retire with as much wealth as possible.
An asset-dedication investment approach is a much better option. This approach is based on the dedicated portfolio theory and uses three asset categories (cash, bonds, and stocks) to ensure that you’re investing in the right asset(s) for your needs.
Build a Perfect Income Portfolio
It might sound a little strange, but you can build a perfect income portfolio. However, it requires care, planning and the right guidance.
The first step is to choose the right stocks – equities with at least $10 billion in market capitalization fit the bill. You also need to blend those stocks with bonds, but not just any bonds.
You must avoid bond funds completely, and my recommendation is that you focus on high-quality corporate bonds and municipal bonds.
With those bonds, you can create a ladder that will offer years of predictable income that stretches as far into the future as you like.
You also need to have the right distribution solution, or you could find that you’re not able to live comfortably. You need to find a way to mitigate the impact of disbursements while still gaining growth.
Retire Happier by Improving Your Health
As my final note, I urge you to look to your health. Medical bills can quickly destroy your retirement savings, and even just basic healthcare can be incredibly expensive. The better you watch your health now, the healthier you’ll be once you retire. Of course, there are many ways that you can improve your health, but what if you’re 50 or older?
The better you watch your health now, the healthier you’ll be once you retire. Of course, there are many ways that you can improve your health, but what if you’re 50 or older?
Obviously, you should quit smoking (if you still do). You also need to drink in moderation. Pay attention to your blood pressure, and watch your weight. Really, weight-related diseases and lifestyle-related health conditions are the most likely to cause you major problems as you get older. Diabetes, heart disease and the like are all easily avoidable with the right steps.
Really, weight-related diseases and lifestyle-related health conditions are the most likely to cause you major problems as you get older. Diabetes, heart disease and the like are all easily avoidable with the right steps.
In the end, the ability to retire happier is in your hands. I’ve outlined several important steps that can help ensure that your golden years are as comfortable and worry-free as possible, but it’s up to you to take action.
It’s never too late – whether you’re approaching 50 or have already passed that mark, it’s possible to save for retirement and be happy during your golden years.