A major part of the American Dream is to finish your career and retire to enjoy those “golden years.” As you near retirement and prepare to enter this stage of your life, it’s important to assess where you are financially.
This is especially important if you’re thinking of early retirement. But what exactly does that mean?
If you’ve celebrated your 50th birthday, here are some things to consider when reviewing your finances:
Savings—Your post-retirement savings is so important in keeping you afloat after you no longer get that full paycheck. As such, you need to make sure that you are saving more money and borrowing less.
By this point, you should start to knock out a bunch of those loans you took out earlier in your life including your mortgage and student loans. Other loans, such as car loans or home repair loans, should be minimized and credit card debt should be paid off as quickly as possible. Once this is done, you can put more money into building up a sizable retirement nest egg.
Social Security—Although many people worry about the status of Social Security and if it will survive another ten to twenty years, you still have the opportunity to project what your earnings will be. You can contact the Social Security Administration to get a projection based on how much you have paid into the system.
This will not be the final, official word from this agency on the subject as it may change between now and retirement. But it does give you a number to use in your budgeting estimate.
Government Pensions/Retirement Funds—This is also the time to talk to your representatives in regards to your pension or personal retirement annuities. Regardless of what system you are in, you should be able to sit down with someone who manages your retirement plan and get a projection of what you can count on when you actually retire.
Now that you have reached 50 years of age, you need to start assessing where you stand on your retirement. By finding out these three key figures, you can forecast exactly how much income you can count on when you retire. Then, an estimate of expenditures is next to determine if you need to adjust your savings or have to postpone retirement until you can afford it.