For young people, retirement often seems far away. As you age, the prospect gets closer and closer, and the need to make sure you’re financially prepared to retire becomes stronger. Retiring often means living on a fixed income, which means the more you can do to reduce your expenses, the better off you are likely to be.
Account for Healthcare Costs
The cost of healthcare is one of the more significant costs you’ll have to manage in retirement. It’s easy to underestimate how much you’ll spend on healthcare, which means it’s more difficult to make sure you have enough saved up to cover those expenses. Many retirees rely on Medicare to cover healthcare costs, but that doesn’t absolve you from needing to plan the cost of healthcare into your retirement balance. You may not have immediate access to Medicare, so at a minimum you’ll need to account for healthcare costs while you wait.
Pay Off Your Mortgage
It’s best to pay off your mortgage before you retire. Overall, the fewer expenses you have to keep up with, the better off you’ll be financially. Mortgages are often well over $1,000 a month, and freeing up that income to be put towards anything else can be valuable. Refinancing your mortgage can provide you with a path to paying off your mortgage more quickly. This is especially valuable in times when the interest rates are low. Refinancing in the current environment can help you save thousands of dollars.
Become a Master at Budgeting
If you want to successfully live on a limited or fixed income, you need to be able to budget your resources properly. Living within a budget is a good idea regardless of whether or not you’re retired, but becomes essential once you have. Practicing in your younger years will help you develop the necessary discipline to stick to your budget and appreciate the value of delayed gratification. You’ll develop the spending habits and knowledge you’ll need in order to become more proficient at managing your personal budget.
The early part of retirement is often a period of adjustment. Personal financial moves, such as accounting for healthcare costs, paying off your mortgage, and becoming a budgeting master, can help you put yourself in a better position in retirement. You’ll be in a better position to live off of your retirement accounts, investments, and any other sources of income you may have.
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