In the course of a lifetime people encounter many money milestones. It can be difficult at times to know what to do with our money when we go through significant changes in life. Here are some of the major money milestones people encounter: Marriage: According to TheKnot.com, Americans spend an average of $27,000 on a wedding. So vow not to start off your marriage in debt. Curb spending on the big day by cutting expenses where possible. Buying a Home: Experts recommend saving for a 20% down payment for a home. Make sure to shop for a home loan and plan to spend no more than 30% of your taxable income on housing. Starting a Family: The average cost of raising a child is $235,000, not including college. Plan your household costs to increase 10 to 20% with the addition of a baby. Getting a Divorce: Divorce is expensive. Build a team of professionals who are knowledgeable about the implications of divorce, you will need a lawyer, accountant and financial advisor. Retirement: 56% of Americans ages 18 to 34 aren’t saving for retirement. Take advantage of your employer’s 401(k) or other sponsored retirement plan. A good plan is to save five percent of your income. ]]>
How to Plan for Retirement
A retirement plan is more than an idea or a casual conversation with your significant other. It’s a detailed description of how you are preparing for your life after retirement and what you want that life to look like. Furthermore, that plan will need to be updated when unforeseeable life events occur. Here are some tips that anyone can use when preparing for retirement.
Make your retirement checklist
Everyone’s retirement plan will be unique. But one thing all good plans have in common are that they are tangible. Make a checklist of things you need to accomplish before, during, and after retirement. Depending on your situation, this may include:- investment goals
- savings goals
- pension and 401k details
- healthcare cost changes
- social security benefits
Determine how much you’ll need
Lifestyle aside, retirement is expensive. And with inflation and cost-of-living increases it will likely only get more expensive. No one can predict, with 100% accuracy, what will happen in the future when it comes to stocks and investments. But when calculating your monthly expensive after retirement you should remember to adjust for increases in these costs. Put your post-retirement expenses in a spreadsheet (estimate high). Next to them put your savings and post-retirement income. This will allow you to balance your monthly spending post-retirement.Consider your housing situation
If the home you currently live in is the home you want to stay in forever, you might want to consider potential problems that may arise. As we age, things like steep stairs, lawns to maintain, and other issues may become a factor. Others elect to move into condominium-style housing. Many people don’t want to move too far from family, whereas others seek out better weather conditions. Whatever you choose, do your research in advance to learn just how much moving will cost (or save) you.Don’t touch your retirement savings
Emergencies may arise when we need to put the present before our longterm plans. But it’s important not to fall into temptation of spending retirement savings on luxuries. Remember that financial troubles at retirement age are emergencies in and of themselves. Also keep in mind that there are often withdrawal penalties for taking funds from a retirement account.Start your plan now and update it often
It’s never too early or too late to start saving for retirement. Whether you’re in your 20s or your 60s, there are always benefits that can come from good retirement planning. If you’re young, all the more reason to begin planning early. Since rates of return on investments are anything but predictable, investing earlier is more likely to pay off in the long run. Another important thing to remember is to update your plan regularly. Once per year, around tax season, reflect on the retirement checklist and spreadsheet that you made. Are you making progress toward your goals? Is your income trending upwards or downwards? You may find that if you keep retirement on the forefront of your thoughts that you make more informed spending and saving decisions. ]]>Cutting Costs for Seniors
Retirement can be expensive. Transitioning from a steady income to living on a fixed one can be difficult. If you are nearing or currently in retirement there are some ways to stay within budget and reduce your spending. Here are some tips to help reduce your retirement expenses: Have a Budget The most important and crucial first step is to create and stay within a budget. Over the course of a few months track and review all of your spending habits. Track things like food, housing, utilities, entertainment, etc. and create categories of spending. Analyze how you are spending money and if needed make adjustments to stay within budget. Manage Your Costs If you need to reduce your spending there are some easy ways to accomplish that. Try using coupons, shopping for store brands and even buying in bulk. If you have too much of a bulk item try splitting with a friend. Look for free entertainment in your area at the local library or senior center. Take advantage of shopping senior discounts. Many stores have certain days or hours when seniors receive a special shopping discount. It may also be possible to lower household costs such as electricity, and water by negotiating with your utility company. They may even offer a senior citizens or income discount. Talk to family members about family cell phone plan to help reduce costs too. Manage Your Medication Health care costs are a big concern for seniors. Talk with your health care provider about any generic medications available. Generic medications are often much less expensive. Don’t be afraid to shop around, prescription and medicine prices are not the same at every store. Most of all continuously review your budget and spending to make sure you are staying on track.]]>