Retirement planning does not need to be a complex or challenging process. Those hoping to retire in ten years might not have a detailed retirement plan in place yet. More than one-third of Americans do not have a retirement plan, whilst almost 36% admitted to never having a retirement account.

Although retirement might be decades away for many, preparing for it now will help ensure that you can live happily and comfortably financially when you choose to retire. A happy retirement can look and mean something different to each individual. Some see retirement as a chance to stop working and enjoy life at a slower pace. Others will use the time to start hobbies or travel, and some will transition from full-time employment to part-time.

Regardless of how you plan to spend your retirement, you will need the funds in place to enable you to live comfortably with little worry. If you are looking at your current retirement plans, these are a few steps to consider to help prepare you for your upcoming retirement.

Downsize Your Debt

If you have any outstanding debts to be paid off, consider accelerating payments or debt consolidation to ensure that your debts are paid off before you retire. It can be a daunting concept, but it is one you will be grateful for doing once you enter retirement.

When you limit any new debt you encounter and minimize your current debt, you can help yourself reduce the amount of your retirement income that will have to be put towards paying your interest payments.

You can reduce your debt by paying off any higher interest rate, such as personal loans, auto loans or credit cards. These debts offer no tax benefits. Instead, they rapidly reduce your savings, which is why you do not want them lingering when you go into retirement.

Aim to go into retirement debt-free, enabling you to invest your money into hobbies and activities to enjoy in your newfound free time.

Calculate Retirement Income

After reducing your debts, calculate what your retirement income will likely be. It can be an estimate from your predictable income, including any employee pensions and Social Security. The remainder of your retirement income will come from other contributing factors. These include savings and investment accounts, wages, and wages earned during retirement.

Consider Alternative Mortgage Options

As you retire, you may choose to move to a new home. You may feel it is time to downsize or that you want to move to a new location. Whichever your choice is, you will likely need to invest in a new mortgage to help you pay for your new home.

Those eligible for a reverse mortgage may choose this route to help manage their monthly expenses during retirement. However, if you struggle to cover the costs of your home or are likely to move due to health reasons, a reverse mortgage might not be ideal for you. There are options available for those who have already invested in a reverse mortgage but want to get out of it. If you are unsure of how to get out of a reverse mortgage, this guide will provide helpful information on options to consider.

Prepare For The Unexpected

Life is filled with many uncertainties. It is impossible to know for certain what the future may hold. Some retire expecting the worst to happen. Unfortunately for some, this may happen. To prepare yourself for the unexpected, organize your retirement now, whether it be putting plans in place or building your savings. Think about how you would pay for any medical bills or maintenance work in your home.

One way to prepare for the unexpected is to build an emergency fund. Having a healthy retirement account is essential to living comfortably after you retire. However, creating an emergency fund will be beneficial should you encounter any issues, such as a delay to your pension. Your emergency fund should have at leave six months’ worth of income saved. It can be used to cover the cost of insurance or housing. In addition to this, if you choose to retire early, it is likely that you will not be able to access your funds until a certain age. Having the emergency fund will allow you to retire early should you wish.

Some of these might be difficult conversations to have, especially when talking about unexpected health issues. Having these conversations early on will help you and your family be prepared if one of these issues occurs during your retirement.

The Bottom Line

If you have set your planned retirement date a decade away, it can seem like a distant occasion. Despite it being over a decade ago, it is still essential to plan carefully and set realistic goals for yourself. Even if you have started late, you will still have plenty of time to build the funds needed to live a comfortable life during retirement.

One issue many struggles with is designing a comprehensive retirement plan. They want to create a plan that perfectly strikes a balance between the desired standard of living with realistic return expectations. Do not be afraid to ask questions about making a retirement plan.

Consider the monthly budget you will have. Spend defining your budgets for personal money compared to household finances. For instance, decide your budget for items you want and things you need to have. It will allow you to set transparent budgets, which will help you remain financially comfortable as you enjoy retirement. Another thing to consider is how much you are anticipating spending annually. Like monthly budgets, set a limit for the year to help keep yourself financially stable. Take into account how long your current retirement savings are expected to last with the budgets you have created.

Preparing for your retirement earlier can help to ensure that you have enough funds saved. When it is time to retire, you will have the funds dedicated to pay for any monthly bills and enjoy the abundance of free time that you have.