2021: A Year to Start Planning Your Retirement
It’s never too early to start planning for your retirement. That is what the challenges from the year 2020 have taught us. We are witnesses of how an economic crisis can severely affect our financial situation. But the wisest lesson we can probably get from our recent experiences is to start making plans for the future with all that happened being considered.
Map out the plan that is right for you and take time to think about your retirement goals. You are never sure of what is going to happen in the coming years. There might be a lot of changes that you have to deal with, like inflation or higher prices of commodities. Thus, you need to look into feasible options on how you can come up with the best retirement strategy.
One of the perks of planning as early as now is that you’ll enjoy life after retirement without running out of money. Since it is an expensive life decision, it’s better to be secured and prepared. After all, no one wants to spend the next decades with the worst situation resulting from unplanned decisions.
You might be wondering why you should plan now while you are still too young. Here’s a list of reasons that will change your mind:
Start early to have an understanding of what you can do today.
By starting early, you’ll get to understand what you can still do to prepare for retirement. You can answer key questions about tax, savings, investment, and benefits. Setting aside a specific portion of your monthly income for your retirement savings will make a huge difference in due time. If you wait to go beyond your 40s before saving, the challenge would be difficult. If you start now, your money will begin to grow as well.
Start now to enjoy early retirement.
With all the uncertainties brought by the pandemic, many people were forced to have an early retirement without having enough money yet. Most of them were laid off because of sudden closures of establishments. It’s an unfortunate event that no one has expected. This is why, if you have your retirement plan already in place, you can survive the impacts of these uncertainties. Also, you can have more options.
Moreover, if you intend to retire early, all the more you should work on retirement plans ahead of time. Time will come that you prefer to rely on passive income or manage your own business and leave the workforce behind. That means more time for your family. If you are financially secure at that time, it won’t scare you to take early retirement.
Start early to see the bigger picture and make informed decisions out of it.
Having enough knowledge about where you are with your retirement plans will allow you to make important life decisions. If you want to explore and try another career or business, it might be great to do it without hesitations because you are confident about your financial stability.
How to Start Planning for Retirement
As you welcome the year 2021, you surely have prepared resolutions or things you want to change in the New Year. But aside from saying goodbye to old habits and declaring a more fruitful year, retirement planning is something you should be looking forward to this year. Take this list of retirement advice and understand the best way to prepare for retirement as you go through the process.
- Determine when you want to retire.
Knowing when you want to leave the workforce is a way to determine how you can preserve your savings and how much you can save each month. Retirement is a serious discussion that might make you feel unprepared especially if you are still in your 20s. However, to solidify ideas and plans, write your thoughts and make a timeline. You will start to appreciate it when you have created a concrete plan.
As you write your thoughts, consider some certain life events like having your own family, pursuing a new degree, or establishing a business.
- Think of your spending habits.
After you retire from work, you’ll be spending more time on leisure such as vacations and retirement trips. It would also mean frequent withdrawals from your account to cover different expenses. As you age, health problems are unavoidable too. What you do when you when you need to start putting more of your money into medical bills and you don’t have funds?
- Aim to be a debt-free individual
While you are still working, deal with your debts immediately. Make sure that as you start planning to retire, you no longer have to pay off loans and credit card balances. When you manage to eliminate your debts before retirement, you get the peace of mind that you deserve after decades of working.
- Invest your retirement savings
Choose among available investment accounts to grow your retirement portfolios. One of the easiest ways to do so is through P2P investments. P2P lending uses an online platform where people gain access to loans through the investment of others. You will get earnings through the interest incurred for every loan. Sounds cool, right?
You can also contribute to a Personal Equity and Retirement Account (PERA) and enjoy a 5% tax credit on your contribution. The earnings you get from investments and reinvestments of the maximum amount allowed are exempted from investment income.
- Start saving
You have to deal with expenses at home and loans you have in the bank. That might be a reason why you cannot start saving. Saving would be a challenge but not impossible.
If your income is too short, then it is time for you to consider earning from investments. If you are already capable of saving enough, aim for a fixed amount each month. It is best to deduct the savings portion first from your income before using the money.
Final Thoughts
A better way to retire is to realize and accept the fact that you cannot work forever. By having that thought, you can condition your mind with what can happen soon. Regardless if you are 50 years or just a few years away from retirement, planning is an essential thing.
After everything that has happened last year, 2021 is the best year to start your plan. It never hurts to stay on top of everything because by the time you are already considering retirement, expect to be in a much better position. Educating oneself on how to retire with confidence is a great goal you can achieve today.
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