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When Is the Best Time to Start Financially Planning for Your Retirement?

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A senior couple sitting at the end of a boat dock on a lake, looking at the sunset

Whatever your vision of retirement may be—enjoying the sun, hitting the road in an RV, watching movies, playing golf—being financially prepared will make it easier to accomplish your vision.

Budgeting for a senior living community is an example of something you can add to your plan. If you wait until the last minute, you’ll enter retirement unprepared for the challenges of late adulthood and other roadblocks.

When you prepare for the future, you are also preparing to handle the present more effectively. When managing your wealth, taking into consideration your life expectancy, future expenses, and your yearly assets helps you create a clear plan.

Where to Start

It’s never too early to begin planning for your retirement. Making wise financial decisions is essential to ensuring a more fulfilling and secure retirement. So what makes a good retirement plan?

Stay Organized

Begin by gathering all the necessary information and organizing your documents—on paper or electronically. This will provide you with a clearer picture of your financial situation, including:

  • Assets
  • Liabilities
  • Income after retirement (pension, etc.)

This step is time well spent as it simplifies the entire process.

Decide on Your Goals

To properly plan your retirement, you’ll need to ask yourself a few questions. Consider your objectives and the lifestyle you desire. Improve your understanding of yourself!

Having a clear picture of what you want will undoubtedly improve your chances of achieving the retirement you desire. Here are some questions to think about:

  • What age do I want to retire?
  • Do I plan to retire gradually?
  • Do I have a pension plan?
  • How will I handle health issues when I retire?
  • What are my plans after retirement? Travel, volunteer, take up new hobbies?

Develop a Budget

Now that you’re organized and have defined goals, it’s time to create a budget and plan for your retirement. A budget will assist you in mapping out your income and expenses to plan your daily finances. 

To begin, make a copy of your current budget. This will assist you in developing a retirement plan to guide you in achieving your long-term goals.

You can always make changes to your budget in the future. Remember that your lifestyle and needs will likely change after retirement, so your expenses will not remain constant. Here are some potential expenses:

  • Vehicle: Repairs or selling your vehicle
  • Health: Your health can change quickly and unexpectedly
  • Entertainment: You’ll have more time to get out and do something fun!
  • Mortgage payments: Maybe you’ll downsize or even join a senior living community like Bethany Lutheran Village!

It’s important to regularly review your finances to know how much money you actually have saved for retirement. Knowing how much money is coming in and out of your wallet will help you make better financial decisions for your future. 

Many people expect to be able to spend half of their retirement years vacationing in the sun. Others prefer to keep it low-key, spending their golden years sipping tea and reading a best-selling novel while enjoying their grandchildren.

No matter how you envision your future, regular budget planning will help relieve stress allowing you to enjoy your retirement. 

Calculate How Much You’ll Need to Retire Comfortably

A good rule of thumb for calculating how much you’ll need for retirement is to account for 70-90 percent of your average annual pre-retirement  income (before taxes and deductions) to enjoy a similar lifestyle.

This is because when you work, you are not living off of your entire salary. Unless you are self-employed, taxes are deducted from your pay along with contributions and other deductions.

Start Planning Today

It’s important to have concrete financial goals when planning your retirement. The better prepared you are, the easier the process will be.

Regarding retirement planning, the most common mistakes are not thinking about it, starting too late, and not saving enough. There are numerous methods to save money, but the first step is to start planning responsibly. Retirement planning is similar to vacation planning because it pays to be prepared. If you would like to get the discussion started on how to fit senior community living into your retirement budget, don’t hesitate to contact us!

Written by Bethany Lutheran Village

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