Are you Feeling ready to retire? According to a recent survey by GOBankingRates, more than 66% of American adults worry that they will run out of money after they retire. Nearly 47% are worried that Social Security will be cut or terminated altogether, and 21% are worried that they will not be able to find a part-time job for additional income.
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With today’s high inflation and economic turmoil, is planning a luxury retirement still possible? Financial experts say yes, it is – if you diligently follow certain steps.
Set your goals ahead of time
What does luxury retirement look like to you? For some, that might mean traveling to London for two weeks and staying in a five-star hotel once or twice a year. For others, it may appear that they live in a more expensive area in order to be close to their grandchildren.
David Adamstein, certified financial planner and founder of The next stage of financial planning. “Sum up the amount this amazing lifestyle would cost. Create an annual spending amount and divide by 12 to get your estimated monthly costs in retirement.”
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Determine how much you need to save each month
Chances are high that Social Security and Pensions won’t cover all of your financial needs in retirement, so it’s important to save yourself too. Whether you want to spend $10,000 or $100,000 a month in retirement, a financial advisor can help you determine how much you need to save by taking into account your rate of return, time, taxes, and inflation.
In general, if you plan to retire at the age of 65, Damien Rothermel – Certified Financial Planner at Rothermill Financial Services It is recommended that you allocate at least 10% of your income to a workplace retirement account. Consider increasing your job prospects if your employer isn’t offering to match or you’re self-employed.
If your idea of a luxury retirement is more generous, Edmstein recommends saving upwards of 20% to 30% of your income.
Start investing in tax-advantaged retirement accounts
The sooner you start contributing to a retirement account, the better.
Danielle Miura, certified financial planner and founder of Spark Financials.
Miura also recommends contributing to a Health Savings Account (HSA). This type of high-deductible plan allows you to save money before taxes to pay for qualified health expenses. Later in retirement, you can also use the money for general living expenses.
Don’t forget inflation
According to the above-mentioned GOBankingRates survey, rising inflation is forcing more than 20% of American adults to delay their retirement plans, about 30% to try to save more, and another 10% to change their investment strategies.
Edmstein said inflation can have a dual effect on retirement. The higher the inflation rate, the more you can expect to pay for living expenses and services in retirement.
“High inflation rates can also reduce the net return on investments,” he said. “This means that the assets may not grow as much as expected.”
To combat the effects of rising inflation, consider contributing more to growth-oriented assets and fixed-income investments at adjustable rates.
Remember to calculate medical expenses
Thanks to inflation, you can expect the cost of medical expenses to rise by the time you retire. Ari Parker, an attorney and principal licensed Medicare consultant, said: the classroom.
People are advised to research health plans ahead of time to see what works best for their budget and needs.
“Those who plan ahead can expect to save hundreds of dollars a year, especially when they have the doctors they want to see, the prescriptions they need, and their lifestyle choices in the network,” he said. “The savings people find in recurring expenses while avoiding unexpected medical bills can be a great contributor to their discretionary savings account.”
Build a cash reserve before you retire
In addition to your retirement investments, Edmisten recommends saving the equivalent of 12 to 24 months of living expenses in a cash account before retirement.
“This will allow you to have all the funds needed to start your amazing retirement journey without having to worry about the stock market or other factors derailing your plans,” he said.
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