If you watched my recent video on calculating whether you’re on track for retirement and discovered that you have some work to do, don’t worry—I’ve got you covered. In this post, I’m sharing ten steps to help you get back on track for a financially secure retirement.
- Start with Your Retirement Plan
The foundation of any retirement strategy is ensuring you have funds available when you need them. Begin with your employer’s retirement plan, whether it’s a 401(k), 403(b), or your own retirement plan if you’re self-employed. Aim to contribute at least the amount your employer matches—anything less is like leaving free money on the table. These plans are beneficial because contributions are often tax-deductible, earnings grow tax-deferred, and withdrawals can sometimes be tax-advantaged.
- Maximize Your Health Savings Account (HSA)
Next to your retirement plan, an HSA is a fantastic vehicle for accumulating wealth. Contributions are tax-deductible, earnings grow tax-deferred, and withdrawals for medical expenses are tax-free. To qualify, you need a high-deductible health plan, which many employers offer. HSAs are unique in providing this triple tax advantage, making them an excellent addition to your savings strategy.
- Pay Down High-Interest Debt
If you still have discretionary income after contributing to your retirement plan and maximizing your HSA, focus on paying down high-interest debt. This includes credit card debt or car loans with interest rates higher than your savings’ earnings. Reducing this debt will free up more money for saving and investing.
- Reevaluate Your Budget
If saving to your employer match or paying down debt is challenging, it’s time to scrutinize your budget. Identify and cut expenses that don’t align with your savings and debt reduction goals. Often, we spend money on non-essential items without realizing how these expenditures hinder our financial progress. Spending with intention and aligning your money flow with your values is crucial.
- Consider Downsizing
Downsizing your home can significantly impact your retirement readiness. While it may be emotionally challenging, as it was for me and my son, it can free up substantial equity and lower your future income needs. The profits from selling your home can be invested, and reduced living expenses will make your retirement savings last longer.
- Increase Your Income
If you’re still not on track, consider ways to boost your income. Many people take on enjoyable side hustles or ask their employers for a raise. Increasing your income can accelerate your savings goals and provide more financial flexibility. If you need tips on negotiating a raise, I can share strategies in a future post.
- Revisit Your Savings Strategies
After boosting your income, reassess your savings strategies. Maximize your retirement plan contributions and make catch-up contributions if you’re over 50. Consistently revisiting and adjusting your savings goals ensures you’re making the most of your financial resources.
- Prioritize Investing
Ensure that your savings are working hard for you by investing wisely. If investing makes you uncomfortable, seek advice from a professional. Retirement plans often include investment advisors, or you can hire one independently. Properly invested funds grow more efficiently, helping you reach your retirement goals sooner.
- Consider Relocating
Relocating to a less expensive area can stretch your retirement savings further. If a lower cost of living aligns with your lifestyle and preferences, moving might be a viable option. Many retirees find that a change in location provides both financial and personal benefits.
- Work Longer
Sometimes, working longer than initially planned becomes necessary. Many people choose to work beyond the typical retirement age of 65 to 70. This decision can allow for more spending on travel or family activities while still employed. Working longer can also provide additional time to save and reduce the years your savings need to cover.
Assemble Your Dream Team
Throughout this process, it’s essential to have a team of professionals supporting you. This “dream team” might include an Estate Planning attorney, tax advisor, investment professional, and insurance advisor. Together, they can help you navigate Medicare sign-ups, Social Security, long-term care, and other critical aspects of retirement planning.
Keep the Momentum Going
With retirement in sight and your plan in place, it’s time to keep pushing forward. Regularly revisit your plan, assess your progress, and adjust as needed. Consistent effort and vigilance will ensure you cross the finish line with a secure financial future.
Retirement planning requires dedication, but by following these steps and utilizing the resources available, you can build a robust foundation for your future. Keep your priorities and values at the forefront, and remember that every effort you make now brings you closer to a fulfilling and financially secure retirement.
For more personalized advice and planning, feel free to reach out to me here. Together, we can create a strategy tailored to your unique goals and circumstances.