Fifty percent of Americans don’t have a retirement plan in place, according to Newsweek. If you’re approaching retirement and haven’t gotten started, you can still take steps to boost your savings, reduce taxes and grow your investments to enjoy financial freedom and greater peace of mind in your golden years. Here are top smart money moves to make for retirement while there’s still time.
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As you get closer to your retirement target date, you might have a sense of your typical expenses, such as mortgage payments, utility bills, property taxes and other costs you’ll need to continue paying when you stop working full-time.
However, it’s also essential to account for unpredictable expenses such as major home repairs, healthcare deductibles, long-term care costs if you fall ill and contributing down payments and weddings for family members.
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To know how much money you have to work with during retirement, start identifying all your sources of income. Will you collect a pension or Social Security? Do you have retirement savings, investments or rental property income? Will you work part-time? Make sure to include the taxes you pay for each income source for an accurate calculation.
You can reduce your debt in several ways, such as paying off your mortgage and car loan before you retire and paying credit cards on time. Prioritize eliminating debt with high interest rates. If you’re carrying a mortgage with a high rate, consider refinancing when rates drop.
The location you live in can have a significant impact on your finances. If you live in a state with high taxes, selling a larger home and relocating to a state with lower taxes that doesn’t tax social security can save you money. Many retirees elect to move abroad to get more out of their retirement.
Many retirees who want to stay close to family might decide to downsize to townhomes or condos to alleviate large expenses like roof replacements and home system repairs. In these communities, the homeowners association can take the physical strain of maintenance tasks off their hands.
In the early retirement years, maintaining a higher allocation to stocks can help protect against longevity risk and keep your savings growing. For example, a moderate allocation could contain 60% stocks, 35% bonds and 5% cash, according to Schwab.
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