Life has its way of catching you off-guard.
You may have been busy making plans about different facets of your life – owning a home, sending the kids to college, going up the corporate ladder. Before you know it, you’re only a few years away from reaching retirement age.
Are you ready for retirement?
If you aren’t, you are not alone. It may seem unlikely, but there are a considerable number of people nearing retirement who have little to nothing tucked away for their golden years. One key reason behind that is that most people become so focused on making plans for the different facets of their lives while they are still young and able that they forget about retirement. If you do not have enough money stashed away for retirement, you either have to work for a couple more years or save more — or a combination of the two.
If you find yourself in a similar situation, here are some personal finance tips that will allow you to correct your course.
Draw up a budget
In order to create a viable plan for turning things around, the first thing that you need to do is to budget. You have to be thorough in listing down your expenses, including incidental expenses. You also have to take into account the impact of each item on your budget in terms of your overall financial health.
If you have not been budgeting and tracking your expenses, you will need to jot down all of the expenses where your money goes and then look at areas where you can save money.
Determine the age when you should actually retire
If your parents retired at the age of 63, it doesn’t follow that you should also retire at that age. You need to figure out how much you have while taking into account your current lifestyle or the type of lifestyle that you want to pursue upon retirement. If there is a mismatch between the two, you might end up broke during retirement.
Consider working a few more years
If it looks like your retirement fund will not last longer than you expect it to, one thing that you can do is to continue working. Instead of diving straight into retirement and facing the possibility of running out of money, you can consider working a few more years to increase your savings. After a few more years, you can look at the state of your financial health and determine whether your retirement funds are enough for you to retire comfortably without needing to go back to work.
Focus on yourself first
As a parent, you only want the best for your children. That may mean making sacrifices here and there, like helping pay your child’s college loans. However, you have to ask yourself whether your grown kids really need your help. If they are doing relatively well and can pay off their loans, you have to shift your focus toward yourself. Funneling your money toward other expenses instead of your own retirement fund can hurt you financially a few years down the road.