Retirement Guidelines for Late Bloomers: Don’t Work for the Man Again
by Guest Author Louis Mack
How long have you been putting off thinking about retirement? The average American puts off saving for retirement, making it a last priority, or doing the bare minimum with 401Ks. You may be surprised what is expected of your bank account in order to retire, and the last thing you want is to be retired for a couple of years, run out of money and then have to start working for “the man” again.
For the period of your life when you are 35-45 years old, you should have one and a half times your annual salary saved for retirement, when you are 45-50 it’s three times your salary, and six times your salary by the time you get to be over 50. Even if you are a late bloomer, there are many things you can do to ensure yourself a future where you can kick your feet back and enjoy what can be the most relaxing periods of your life.
Debt during your golden years is a bad idea, it can lead to stress and a delayed retirement, which may even lead to health problems brought on by stress. It’s important to pay off any credit card, mortgage or car payment you may have to avoid costly interest and the burden of it as you retire.
Budget, budget, budget
If you aren’t using a budget already, get it together people! I know it can be hard to stick to the budget at first, but it is essential to paying off debt and allocating your income properly for saving, stocks, bonds and other investments. Calculate your current income and expenses, and figure out what spending might be in excess in order to save more. I like this free calculator for a broad look at where you can improve upon your current retirement plan. Charts telling you optimistic and pessimistic outlooks of at what age you will run out of money might just be the kick you need to get serious about budgeting.
Retiree health insurance
Hopefully your current employer will provide it, but you can’t always be so lucky. Health insurance is a necessity, and you want to lock in with a company before you get too old and sickly. Just kidding, but really we all know about the preexisting condition reluctance of providers.
Emergency fund
Acting as a protective cushion in case your income is lost for whatever reason, or you incur large medical bills, the emergency fund should have at least six times your monthly income and be completely separate from your retirement savings. It’s never a good idea to dip into your retirement savings, even if your child is requesting financial help, which is I know what a lot of people struggle with. Bulk up your emergency savings account for this scenario and any other emergency you can think of. It’s okay to be generous with your saving here; you may not be a hypochondriac and still need a bunch of money for healthcare bills.
Those of you who are on the brink of retirement or are already retired must keep in mind that you still need an emergency cash cushion. According to Chris Farrell, it should be twice the size of the one you had when you were working to protect you from medical, dental, car, house, and pet emergencies.
Collecting social security
Apply three months before you turn 65 to get the most benefit, but you can do it once you are 61 years and nine months old if you need the assistance. There are a lot of options and you can speak with a representative before you make any decisions.
It’s time to start thinking about retirement and your future no matter how painful smart financial planning may be to some of the early and late bloomers out there. Don’t get stuck working for the man again and enjoy retirement exactly how you want to.
About the Author: Louis Mack specializes in retirement planning for NewRetirement and is only about 5 sweet years away from his own retirement. He plans to spend it forgetting time exists while fishing.