The time has arrived for you to face the grim realities of planning for your golden days ahead. Taking into consideration the fact that your defined retirement benefit plans are fast approaching their maturity deadlines, it has now become all the more imperative on your part to build-up your nest egg.
However, to boost your chances of an ideal retired life, you need to educate yourself and plan in advance as soon as possible.
Do you know what your spending habits are?
Basically, to give a proper forecast of how much income you’d need for retirement in your early life is practically impossible. However, you must be willing to accept that you’ll have more expenses to handle than you may think otherwise.
Average households in the country peak in their expenditures by the age of 45. Still, the average expenditures made by people aged between 65-75 years amounted to around $44,886 per annum. Now, your expenses could be much higher as compared to that. Moreover, health care cost is such a non-discretionary cost that did not fail to record a hike. So, if you haven’t invested in anything for your retirement, then you may at least do so for your health.
Apart from that, wiping out your mortgage debt and taking all the initiatives to ensure that your house is just the one you’d needed, will eventually be helpful in cutting down your retirement costs. This is because housing-related costs are regarded as one of the major financial liabilities for the retirees.
How to reduce your living expenses and boost your savings
Here are some of methods of downsizing your cost of living in order to build-up a better and a larger nest egg for your goldens:
- Reduce your expenditures drastically - If you are really committed to saving money for your retirement, then you’ll have to cut down on some items from your household budget. Moreover, you must be ready to make some major adjustments as well as undertake certain dramatic changes, wherever and whenever required. One of the best ways to lower your monthly household expenses is to downsize your home. It’ll, in reality, save you quite a lot of money, as you wouldn’t need to spend as high as you’d otherwise have to, for the maintenance of a big home. Even cutting back on some minor costs too will be a lot helpful for you and will ultimately boost to your retirement savings.
- Get into a cost-effective hobby - When you’re at it, then retirement can prove to be the most opportune time for you to devote plenty of hours towards your most beloved hobbies. This can be, say for example, golf or any other sport that you love. Actually, the point here is that you shouldn’t deprive yourself of whatever good things life has to offer you at this stage. So, you can try and get yourself involved with a walking group, read a number of books, take up knitting or checkout with various community calendars for recreation as well as for some free activities at a nearby location.
- Make your kids your sentinels - If your kids have grown up and you have little to no retirement savings at all, then you must allow them to shoulder the household’s burden with you like an adult. However, this in no way implies that you stop buying them gifts or helping them in their crises, but then you need to do away with paying for their insurance premiums out of your own pocket. This is particularly applicable if your kids are employed and can bear their own expenses quite comfortably.
Tools to help you organize your financial resources
Here are some of financial calculators that you may use to get your finances in order:
- Retirement calculators - Planning for retirement scares most of the people. However, don’t let the same happen to yourself as well. To ease off the pressure of retirement planning, you can use Bloomberg’s retirement calculator to find out whether or not your savings contribution is sufficient for your retired life or else you can take advantage of CNN Money’s online calculator in order to keep a track over your required retirement savings.
- Mortgage calculators - Even if your bank or the lender decides how much mortgage you can actually afford, but then you may not give your consent to what they have to say. So, to get a handle of your mortgage affordability, you can use a mortgage loan calculator so as to figure out the probable monthly loan repayment amount you can bear and how safe that amount would be for you, keeping your financial health into consideration.
- Debt calculator - In case you are struggling with overwhelming amount of outstanding loan balances, then you may be willing to take a look at some of the online debt calculators to analyze the total time that you’d take to pay them all back, as per your current financial capabilities. Take for instance, you can use CNN Money’s debt-free calculator to figure out the amount of time you’ll require to become debt-free based on your present monthly debt repayment amount. Suppose, if you can contribute as much as possible towards your monthly car loan payments, then you may successfully reduce its principal amount to a great extent and eventually, get rid of the debt comparatively faster.
In addition to the above three calculators, you can also take advantage of the savings calculators in an effort to put your financial house in order through a holistic strategy. Speaking about savings, then their ulterior motive is to get you more money and if you use, say a compound interest calculator, then you would know how exactly your savings are increasing. The idea behind this is that with an increase in compounded interest, your revenue will be more. Additionally, you may use a savings goal calculator too. Financial tools like these will help you to determine the amount of savings you are willing save for your retirement.