Financial planning for retirement
Retirement always seems too far away until it isn’t. Retirement planning seems too scary, but here are 21 ways to make financial planning for retirement relevant, easier and funner.
Financial planning for retirement
Buckle up, fellow time-travelers! We’re about to embark on a journey into the future, where palm trees, cozy hammocks (maybe a banana hammock or two) , and the sweet sound of “cha-ching” await. Yep, you guessed it – we’re diving into the world of financial planning for retirement, and trust me, it’s not your grandma’s knitting circle.
Picture this: You, with a suitcase full of cash (metaphorically, of course), bidding farewell to the nine-to-five hustle and saying hello to a life where the only decision you have to make is whether to nap or nap harder. But before you start picking out shades for your retirement yacht, let’s decode the secrets of financial planning that’ll turn your sunset dreams into a reality.
Get ready for a rollercoaster ride through savings, investments, and a sprinkle of financial wizardry – because retirement planning just got a whole lot cooler. Time to stash the cash and splash the laughs as we unravel the mysteries of financial planning for retirement.
Let the adventure begin!
Add ‘Have a fabulous retirement’ to your Hopes & Dreams
If you’ve been part of our wild ride, dabbled in our tools, or accidentally clicked a link while attempting to perfect your cat meme game, you’ll know we’re all about starting with the big stuff – your grandiose, fantastical, unicorn-riding dreams.
Let’s face it: many of us are unwittingly playing Bingo with other people’s expectations, accumulating more debt than a college student’s late-night pizza habit, and wondering why our wallets echo with loneliness. It’s time for a dramatic pause and a round of applause for self-reflection, my friends. Cue the spotlight on you!
Unveiling your inner desires for your ideal retirement or, as we call it, your hopes and dreams requires the finesse of a detective investigating a missing sock case. But trust us, it’s worth it. Now, while everyone’s dreams are as unique as a fingerprint, there’s one common denominator we should all toss into the dream salad – “Have a fabulous retirement.” Because let’s be real, unless you’re planning an early exit (not recommended), retirement is the grand finale we’re all starring in. Lights, camera, retire fabulously!
But here’s the plot twist – because of a 10-cent word from psychology, “hyperbolic discounting” – retirement feels like a distant relative until it’s knocking on your door like an overly enthusiastic neighbor. Suddenly, it’s a mad scramble, and you’re trying to plan a party for someone you barely know.
Fear not, dear adventurers! We’ve got the treasure map to plan every day for that far-off fiesta. So buckle up your imaginary retirement yacht, grab your crystal ball for a dash of foresight, and let’s chart a course for a retirement so fabulous that even unicorns would envy it. Ready, set, retire in style!
3 retirement financial plans in 1
Next, let’s decode the mystical hierarchy of financial plans, a saga featuring daily battles, short-term skirmishes, and the epic quest for a retirement crown.
There are three financial plan durations – the daily grind (your moment-to-moment survival), the short-term escapades (3-5 years of plot twists), and the long-term odyssey (5+ years, where retirement is the golden treasure at the end). Think of it as a trilogy where the best-laid plans dance together like a synchronized ballet – daily plans waltzing with short-term plans, supporting the grandeur of long-term plans.
Let’s first dive into the epic tale of the bucket analogy. Imagine your financial journey as a magical bucket, brimming with rocks, pebbles, and the finest sand on this side of the Sahara. If you start dumping sand first, good luck squeezing in those pebbles and rocks later. It’s like trying to assemble IKEA furniture without the Allen wrench – not pretty.
But ah, the secret sauce! Begin with the grandeur of rocks (your retirement dreams), gracefully add the pebbles (like scoring 100% on your employer match), and sprinkle in the sand (daily goals, because who doesn’t love a sprinkle of daily drama?). Voilà! You’ve crafted the perfect potion for financial success, with room to spare for a little magic.
Here’s the twist: if you’re caught up in a sandstorm of weekend splurges and dining extravaganzas, your grand plans could crumble faster than a cookie in a kid’s hands. Suddenly, that dream vacation becomes a ‘wish upon a shooting star’ moment.
So, dear wizards of wealth, focus not only on the sand but also on the majestic rocks and charming pebbles. Strike that financial balance, and you’ll be riding off into the sunset on a retirement unicorn. Ready for the next chapter? Drumroll, please…
1. Create a long-term financial plan for retirement
Here’s where we crack the code on planning for those big, bad hopes and dreams. And when I say big and bad, I’m not talking about your neighbor’s cat who thinks it’s a lion. No, I’m talking about goals so massive that they high-five each other.
a. Calculate how much money you already have for retirement
Creating a retirement plan is like herding cats – challenging but doable. So, let’s wrangle those dollars with a dash of humor and a sprinkle of glitter!
- Check the Piggy Bank:
- Calculate how much moolah you’ve stashed away for retirement. If it’s zero, don’t worry, we’ll fix that. If you’ve got some, cue the victory dance.
- Paper Chase – Literally:
- Raid your filing cabinet, glove compartment, and that drawer where you stash random receipts. Gather every financial statement like you’re preparing for a top-secret mission. We’re talking checking, savings, retirement, investments – heck, even that IOU from your cousin.
- Math, the Fun Kind:
- Time for some grade-A mathematic wizardry:
- Calculate your true take-home pay (minus the coffee fund and the occasional impulse buy).
- Tackle your debts – short and long-term. Imagine this as your financial superhero moment.
- Unleash your inner accountant and calculate all your assets, from your vintage comic book collection to that mysterious jar of change.
- Time for some grade-A mathematic wizardry:
- The Grand Finale – Net Worth Extravaganza:
- Total up your net worth (assets – liabilities). Include your Health Savings Account (HSA) and the mystical Value of Retirement Investments. Voilà, you now have a number that screams, “I’m ready for a fabulous retirement!”
And if all this math feels like a mental rollercoaster making your head spin faster than a Beyoncé dance move…
Fear not! We’ve got your back. Grab a cup of coffee, take a deep breath, and maybe consider hiring a math magician. Remember, even Hogwarts had professors for a reason! Now go forth, financial wizard, and conquer that retirement plan like a dragon in need of slaying.
b. Estimate how much money you need to retire fabulously
Let’s demystify the retirement riddles, our financially curious friend. Planning for a retirement that’s not just comfortable but struts into the room with a feather boa requires a bit of humor and a dash of financial wizardry. Time to break down those retirement formulas with a wink and a smile:
The Retirement Recipe Book: Unveiling the Formulas
1. Option 1: The Income Hug
Hug your pre-retirement income with an annual replacement of 70-85%. Because who needs 100% when you can have a retirement discount?
2. Option 2: The Magic Number
Believe in the magic number of $1.7 million to retire comfortably today. Because, you know, $1.6 million is so last year.
3. Option 3: The 4% Rule
Embrace the 4% Rule: Divide your desired annual income by 4%. It’s like financial wizardry without the pointy hat. Want $100,000? You’ll need $2,500,000. Easy peasy, right?
4. Option 4: The Stock Symphony
Join the Stock Symphony: Save 15% of your income from age 25, invest 50% in stocks, and let compound interest serenade you to retirement bliss. Cue the applause for early planning.
5. Option 5: The Salary Ballet
Dance through life with the Salary Ballet: By age 30, save your annual salary. By 40, double it. By 50, quadruple. By 60, sextuple (calm down, it’s a financial term). And by 67, octuple. Because why not make retirement a dramatic performance?
The “No Right Answer” Finale: Keep It Simple
There’s no definitive answer, just like there’s no one-size-fits-all for pizza toppings. Choose the math that tickles your financial taste buds. We like to keep things simple – less math, more laughter.
The Expenses Tango: Simplified Steps
Forget the hustle of mortgage and work expenses; they last season. Assume they cancel each other out. Now, multiply your total expenses by 25 – voilà, the retirement target!
The 4% Waltz: Dancing with Withdrawals
Do the 4% Waltz: Withdraw 4% annually to cover your living expenses in retirement. It’s the financial dance that keeps the retirement party going.
So, whether you choose the Income Hug or the Magic Number, just remember: retirement planning is a journey, and we’re all waltzing through it. So put on your financial dancing shoes and sashay into that fabulous retirement like you own the ballroom.
c. Open and fund all your retirement accounts
Let’s next dive into the whimsical world of retirement planning – because nothing says “fun” like securing your future and dodging Uncle Sam’s paycheck tantrums.
Step into the Retirement Carousel: Choosing Your Financial Steed
The Grand Entrance:
Picture yourself in the retirement ballroom, elegantly holding a 401(k) or 403(b) in one hand and an IRA or Roth IRA in the other – the dance partners of financial security.
Missed the Memo? No Problem:
If you somehow missed the retirement memo when you joined your current workplace, fear not! Talk to the Human Resource wizards or your manager and let them know you’re ready to join the retirement party fashionably late.
Beyond Basic Investing:
Now, if you’re feeling particularly adventurous and can spare more than the minimum for the full employer match, congratulations! You’ve unlocked the bonus level. Option one: Chuck money into your company-sponsored plan, but beware – it’s like the VIP section, expensive and with limited dance moves.
Option two: Contribute up to the maximum allowed, which is $19,500 if you’re under 50 and $25,500 if you’ve hit the half-century mark. It’s like giving your retirement fund a power-up – ka-ching!
Company Plans: A Love-Hate Story:
But hold your financial horses! Company-sponsored plans can be expensive and limiting. It’s like being at an exclusive restaurant where the menu has two options: expensive and more expensive.
Enter the Retirement Oscars: IRA Edition:
Now, for a plot twist, consider opening a Traditional IRA or a Roth IRA. It’s like choosing between a vintage wine (Traditional) or a cocktail with a funky umbrella (Roth). Cheers to retirement!
Tax Bracket Tango:
When deciding between the two, ask yourself: do you want Uncle Sam sipping your retirement cocktail or just casually watching from afar? Traditional if you’ll be in a lower tax bracket, Roth if you’re planning a tax bracket fireworks show.
Plan B for No Company Plans:
If your workplace is missing the retirement fiesta, embrace the solo act with a Traditional or Roth IRA. Because who needs a company-sponsored plan when you can be the CEO of your retirement dreams?
Accountant, the Retirement Sorcerer:
Confused? Talk to an accountant – they’re the Gandalfs of the financial realm. But remember, you can have both IRA and 401(k) on your financial dance card.
In this retirement tale, your happy ending is a golden sunset, a beach, and a cocktail with a funky umbrella. Now go forth, financial adventurer, and may your retirement be as fabulous as a disco ball in its prime!
d. The Retirement Chronicles: A Comedy of Heirs
In a world where paperwork reigns supreme, our hero (you, of course) steps up to knock out the essentials in a single epic swoop. Setting up retirement accounts becomes the financial equivalent of a superhero landing – efficient, stylish, and with a hint of pizzazz.
Scene 1: The Beneficiary Bonanza
As you embark on this thrilling adventure, it’s time to pick your beneficiaries. Think of it as assembling your Avengers – you can have the same superhero for all accounts or mix it up like a surprise plot twist. It’s your financial movie, after all!
Scene 2: Wills vs. Beneficiaries – The Showdown
Enter the dramatic revelation – wills don’t hold the golden ticket over designated beneficiaries. It’s like realizing your cat doesn’t care about your detailed instructions. So, make your wishes ironclad, the kind that withstands financial earthquakes.
Scene 3: The Annual Confirmation Shenanigans
In a recurring comedy segment, our hero takes the stage to confirm beneficiaries annually. It’s like the yearly checkup for your financial health – no doctor’s appointments, just a few clicks to ensure your financial Avengers are ready for action.
Scene 4: Life Insurance – The Finale
Here comes the grand finale! Life insurance, the superhero cape of financial planning, swoops in. It’s not just about leaving a legacy; it’s about making a financial superhero splash. Help your partner, kids, or even distant relatives – because sharing is caring in the financial universe.
Scene 5: The Death Accelerated Benefit Rider – Plot Twist
And just when you thought the story couldn’t get any juicier, enter the plot twist – the death accelerated benefit rider. Picture this: borrowing against your life insurance if diagnosed with a terminal illness. It’s the financial equivalent of turning lemons into lemonade, with a side of extra funds and a dramatic drumroll.
And there you have it – “The Retirement Chronicles: A Comedy of Heirs.” Now, go forth, financial maestro, and let the laughter echo through the financial corridors of your future!
2. Create a short-term financial plan to support your financial plan for retirement
Let’s turn this financial planning gig into a circus act – because who said balancing your budget can’t be a bit of a tightrope walk?
Step Right Up to the Short-Term Financial Extravaganza!
You, the financial ringmaster, orchestrating a short-term financial plan that’s more thrilling than a rollercoaster ride. Now, the common mistake? Thinking retirement is like planning a vacation to Mars – distant and possibly involving rocket fuel. But fear not, fellow space travelers; retirement planning is your month-to-month, year-to-year ticket to financial stardom.
Scene 1: Breaking Down the Retirement Circus Tent
Imagine this grand goal of retirement as the majestic circus tent. But hey, no need to gulp it down like an elephant swallowing a watermelon. We break it down into bite-size chunks – think financial popcorn, easy to digest and surprisingly addictive.
Scene 2: The Dazzling Monthly Juggle
Successful retirement planning isn’t a marathon; it’s a dazzling monthly juggle. Each month is a new act in your financial circus, with tricks involving budgeting, saving, and the occasional financial somersault. Forget the three-ring circus; this is the five-ring financial Olympics!
Scene 3: Yearly Financial Fireworks Display
And once a year, brace yourself for the grand finale – the yearly financial fireworks display. It’s where you review, reflect, and maybe even throw in a few financial cartwheels. Because who doesn’t love a good cartwheel when dealing with money matters?
So, there you have it – the short-term financial extravaganza, where retirement planning is more like directing a blockbuster than crunching numbers. Now, go forth, financial daredevils, and let the financial circus begin!
a. Calculate your retirement balance targets in 5-year increments
In Step 1, you dipped your toes into the grand pool of estimating the colossal sum needed to retire fabulously – current total expenses multiplied by the mystical number 25. Now, I know what you’re thinking – retiring fabulously sounds as achievable as training a cat to do your taxes. Fear not, my fiscally curious friends, for achieving this towering goal is simpler than teaching a dog to fetch your morning coffee – one small step at a time.
Here’s the secret sauce to turning this far-fetched dream into a reality: take that target retirement number (current total expenses multiplied by 25) and slice it into bite-sized 5-year increments. It’s like turning your financial mountain into a series of charming financial molehills. Planning to retire in 20 years? Calculate the moolah needed in five, 10, 15, and 20 years – easy peasy.
Now, if you’re eyeing retirement in 30 years, buckle up because you’ll have six numbers to juggle – five, 10, 15, 20, 25, and 30 years. It’s the financial equivalent of juggling flaming torches – daunting yet oddly exhilarating.
And here comes the grand reveal of the investing magic – your earned interest compounds like a snowball rolling down a financial hill. The longer and more consistently you invest, the faster it grows. What’s a financial Everest to conquer in five years becomes a mere stroll in the park to double in 10, and even easier to triple in 15 and quadruple in 20 years. It’s like watching compound interest perform financial acrobatics – who knew money could be so agile?
To put this wizardry into numbers, we bring in the Rule of 72. This mystical rule calculates how long it takes for your investment to double at a fixed annual rate of return. For instance, turning $5 into a dazzling $10 at a conservative 7% return would take approximately 10.3 years (72/7 = 10.3).
Note: It’s more of a guide than a rule, despite its ruley name – financial rule-breaking at its finest.
b. Calculate your retirement balance target for 1-year
Now that you’ve unraveled the financial crystal ball and glimpsed the gold-laden horizon of your long-term retirement goal, let’s sprinkle a bit of magic to unveil the annual treasures on your journey. Calculate how much financial loot you’ll need in just one year to stay on course for your five-year extravaganza.
It’s a mathematical waltz – take your gleaming 5-year target and gracefully divide it by 5 to unveil your one-year annual targets for the upcoming five years. Imagine it as the financial foxtrot, smooth and rhythmic, sans the complicated dance moves. Now, in this enchanting calculation, we don’t bother with the intricacies of growth. Growth, my financial friend, is the rainbow gracing the top of your pot of gold in this short-term spectacle. It’s like adding a pinch of fairy dust – delightful, magical, and undoubtedly the cherry on top of your financial sundae.
c. Review and update your investments
Embrace the financial tango of reviewing and updating your investments – an annual dance that keeps your portfolio foxtrotting smoothly, with a side note that you can’t miss the bi-annual beat. Channel your inner financial maestro and, at the very least, take an annual bow, but no more than a bi-annual curtain call to ensure your investments are hitting the right notes.
Now, if you find any rogue investments not performing their expected pirouettes, it’s time to gracefully usher them off the stage – cue the sell button for a swift exit.
Consider it a financial performance worthy of a standing ovation. Some folks synchronize this investment symphony with their annual tax-filing ballet. On the flip side, some prefer to dance through the financial routine twice a year – coincidentally when they’re also checking the batteries in their fire alarms (because safety comes first, folks, and remember to check those batteries bi-annually). It’s a financial waltz with a sprinkle of practicality – keep the investments sizzling and the alarms buzzing.
d. Get investment help with your retirement investing
What scares people off from investing for retirement is, well, investing. But it doesn’t have to be scary, especially today.
3. Create a daily financial plan to support your financial plan for retirement
Ever heard the saying, “Beach bodies are made in the winter?” Well, a fabulous retirement is made every day for 50 years.
Now that we’ve looked one, five, and 30 years out to plan for your retirement, let’s look at the day-to-day.
a. Set up recurring contributions to your retirement accounts to meet your 1-year and 5-year retirement balance targets
1. Company-sponsored retirement account
You’ve conquered the riveting world of 401(k) or 403(b) paperwork – cue the confetti cannons! Now that your account has gracefully pirouetted into existence, it’s time for the star-studded performance – funding and investing. It’s like getting front-row tickets to the financial Broadway of your dreams without the hefty ticket price.
But here’s the showstopper – your employer might feel generous and ready to sprinkle some magic in your financial hat. They could match some of your contributions, essentially tossing free money into your financial top hat. Don’t be the person turning down free money – that’s like refusing a chocolate chip cookie because it’s not gluten-free. Contribute enough to your employer-sponsored retirement account to grab that full match, and let the money rain down like a financial confetti parade.
Here’s the tax-saving twist – your employer can whisk away your contributions before the IRS even knows they exist. It’s like having a financial invisibility cloak against taxes. And that’s not all – your investments in this magical account will grow tax-deferred. Sell investments and collect dividends – a tax-free carnival for your money. In other words, no taxes lurking around the corner, ready to snatch your hard-earned cash.
Now, fast forward to your retirement extravaganza. Yes, you’ll pay taxes on the money you withdraw, but here’s the punchline – if you’re in a lower income tax bracket by then, you’ll come out ahead. It’s like having a crystal ball that shows your future self sipping cocktails on a beach with a lower tax bill and a smug smile.
2. Traditional and/or Roth IRA
Now that you’ve summoned the financial spirits to open your Traditional and/or Roth IRA, it’s time to add a touch of magic – automatic, recurring payments. Picture this as your financial fairy godmother waving her wand and making your contributions like clockwork.
For the under-50 crew, aim for a dazzling maximum contribution of $6,000 in 2020, and if you’re part of the golden 50-year-old or older club, raise the curtain with a $7,000 spectacle.
Now, let’s sprinkle some enchantment on the payment setup – go for the grand entrance with direct deposit from your employer or a recurring Electronic Funds Transfer (EFT) from your bank. It’s like having your financial minions handle the contributions while you sit back and enjoy the show – because who needs manual effort when magic is an option?
By automating these contributions, you’re not just reducing your day-to-day involvement but also dodging the risk of missing a contribution. It’s financial consistency without the hassle – consider it the secret sauce to a stress-free retirement prep. After all, in the magical kingdom of finance, consistency is the key that unlocks the treasure chest.
Now, the real kicker – the more consistently and regularly you feed your retirement accounts, the better the feast when you retire. Plus, who knows, you might be able to retire sooner than you predicted. It’s like a financial fast-forward button for your retirement dreams.
b. Make a budget aligned with your long- and short-term financial plan for retirement
Ah, the dreaded B-word – but fear not, my financial friend, because “budget” is not a four-letter curse and definitely not a crash diet in disguise.
Think of a budget as your trusty treasure map on the grand quest for the financial El Dorado – aka retirement. It’s not a dictatorial ruler; it’s a friendly guide telling you what treasures you can unearth and when ensuring you stay on the golden path to your financial dreams.
Now, here’s the juicy part – embracing a budget means less stress (goodbye, financial headaches), better sleep (sayonara, late-night money worries), and more happiness (hello, cheerful bank account). And let’s not forget the bonus round – more (and, dare we say, better) moments of intimacy. Yes, you heard it right – a well-crafted budget might just sprinkle a bit of magic in your love life. Who knew numbers could be wingmen?
Sure, the idea of creating a budget might send shivers down your spine – numbers, formulas, and spreadsheets, oh my! But think of it as a financial adventure, where spreadsheets are your trusty sidekick, numbers are the treasure chests, and formulas are the magic spells that unlock financial success. It’s like conquering a dragon, but instead of fire-breathing, it’s just a bunch of equations.
So, let’s banish the budgeting bogeyman and turn it into your financial ally. A budget isn’t a scary spreadsheet monster; it’s the superhero cape you didn’t know you needed. Embrace the adventure, and may your budget be as legendary as a pirate’s map to buried treasure.
c. Create and schedule your Milestone Rewards
Ah, the distant echoes of a financial goal set decades away – like planning a surprise party for future-you and expecting present-you to stay hyped. But fear not, because, my fellow financial enthusiasts, we’ve devised a cunning plan to sprinkle joy along the journey – behold, the legendary Milestone Rewards!
Sure, the idea of socking away $2,000,000 for retirement might sound like conquering a financial Everest, but let’s face it, the daily grind could use a bit more pizzazz. Enter the Milestone Rewards – affordable treats that transform your financial journey from a marathon into a series of mini-victory parades. It’s like a party but without the hangover of regret.
Imagine this: you open all your retirement accounts, set up those automatic and recurring contributions, and voila – you’ve earned a 2-for-1 ice cream cone date with your hubby. Who knew financial responsibility could taste so sweet?
But wait, there’s more – reserve $50 in cash for a splendid dinner celebration when you’ve aced a full quarter or three months of faithfully making those recurring retirement contributions. It’s like a quarterly financial feast minus the overdraft indigestion.
And here’s a plot twist – set aside $100 for a fancy new piece of clothing if you happen to smash an annual goal earlier than your financial crystal ball predicted. It’s like treating yourself to a victory robe because, let’s be real, financial success deserves a wardrobe upgrade.
The trick here is to plan rewards that align with your soul and don’t torpedo your real goal of amassing wealth for retirement. Think of it as a financial spa day – pampering yourself without compromising the long-term glow-up.
What else does a financial retirement plan include?
Family needs in retirement – retirement planning for families
The financial jigsaw puzzle – with college costs, housing, and healthcare resembling a game of financial Twister – it’s no wonder family finances and retirement planning are morphing into an “all for one and one for all” circus act.
Now, how do we balance the act of caring for parental units without turning our retirement dreams into a financial tightrope walk? And let’s not forget the delicate dance of covering our own retirement needs without moonlighting as a financial burden on the next generation – because, let’s face it, Uncle Scrooge’s approach won’t win any popularity contests.
Enter the superhero capes for the LGBTQ community – saving and investing for retirement early and eagerly. Yes, it’s a bit like preparing for a financial marathon while juggling flaming torches, but hey, no one said retirement planning was a walk in the park.
Now, for those nodding along with a “but easier said than done” mantra, fear not – execute on our advice above like a financial ninja in action. The earlier and more enthusiastically you dive into the financial fray, the better equipped you’ll be to dodge the curveballs life throws your way.
And for those fashionably late to the financial planning party, fear not – cue the drumroll for the Wealth Builder’s Pyramid. It’s like the express lane to financial security, promising a quicker ascent to the money mountaintop.
So, fellow financial tightrope walkers, don your capes, execute financial acrobatics, and may your retirement be a circus of joy, not a financial high-wire act.
1. Maximize stock investments
We discussed stock market investing above. Reread the above as necessary and implement as soon as possible.
2. Invest in real estate
The real estate jungle is a wild terrain with options ranging from hosting Airbnb guests to flipping houses like a real-life Monopoly mogul. It’s a bit like choosing between a rollercoaster and a merry-go-round, each with its own thrills and spills.
Now, if the mere thought of being a landlord or an Airbnb/Misterb&b host sends shivers down your financial spine – fear not, my risk-averse friend, your golden ticket lies in the world of stocks, sprinkled with the magic of real-estate investment trusts (REITs) and the whimsy of crowdfunded real estate investments.
Think of it as assembling a financial dream team without the hassle of fixing leaky faucets or dealing with demanding Airbnb guests. Your best bet is to diversify your stock investments by blending REITs and crowdfunded real estate into your retirement portfolio. It’s like having a diversified stock cocktail with a splash of real estate flavor – less drama, more dividends.
And here’s the kicker – several companies are like fairy godmothers for your financial Cinderella story, specifically crafted to help you weave real estate into your stock-centric retirement portfolio. They’re like the savvy sidekicks in your financial fairy tale, ensuring your portfolio lives happily ever after.
3. Start a business
The sweet symphony of starting a business is easier said than done, right? But fear not, my aspiring entrepreneurs, for today’s secret weapon, is a lower barrier to entry than a limbo contest on roller skates. Forget the days of needing a brick-and-mortar store – it’s a digital era, my friends, where even a cat with a keyboard can be an online sensation.
So, channel your inner hustler and do something – anything – that throws a few extra coins into your piggy bank. Who knows, maybe your side hustle will open doors faster than a cat burglar on a crime spree. Money-making opportunities might just fall into your lap like ripe fruit from a low-hanging tree.
Now, let’s be real – none of these ventures is a walk in the park, more like a quirky dance through financial rain showers. But here’s the silver lining – they are doable, and each recommendation is like a golden ticket on your late-stage retirement planning adventure. Think of it as a financial scavenger hunt, with success as the ultimate treasure.
So, if you find yourself diving into retirement planning in your 50s and 60s, summon your inner superhero with a “can-do” attitude. Execute this three-step strategy pronto because, my financial friend, time is of the essence – think of it as a race against the clock, but with fewer sweatbands and more financial victories.
Caring for the family while planning your retirement
Because who doesn’t want a retirement free of worrying about needy relatives? It’s like preparing for a family reunion without the awkward small talk. Fear not, my savvy planner, for below are four ways to weave your family into your financial tapestry without sacrificing your retirement serenity:
1. Specialized Trust for Family Members:
- Craft a trust worthy of Shakespearean drama but with a happier ending. Include contingencies for relatives like nieces, nephews, children, and grandchildren.
- Plan for potential financial emergencies or long-term unemployment – it’s like financial armor for your heirs.
2. 529 Plan:
- Enter the realm of 529 Plans – state-sponsored education savings plans where you can stash your financial treasures.
- Feel the power of contributing up to $310,000 in some states – it’s like sending your financial minions to fetch knowledge.
- Unleash the UTMA/UGMA accounts – savings plans where you play the role of the wise custodian for a child, possibly your own.
- Watch out for the age of majority, usually 18 – it’s like Cinderella’s clock striking midnight, and the money becomes theirs. Yikes indeed!
- Embrace the simplicity of a gift account – a haven for money you wish to bestow upon your kin.
- Stay under annual gifting limits to avoid financial dragons – because taxes are the villains in this financial fairy tale.
In the grand scheme of things, these plans let you prepare for the inevitable without turning your retirement dreams into a Shakespearean tragedy. It’s like having a financial crystal ball, predicting family needs and leaving you with the peace of mind to retire like royalty.
Medical tourism in retirement
Now, we’ll tackle the wild world of U.S. healthcare – where costs can make your retirement savings disappear faster than a magician’s disappearing act. But fear not, my future jet-setting retiree, for there’s a secret weapon in your financial arsenal: medical travel, or as I like to call it, the healthcare vacation extravaganza.
Now, you might wonder, “Why in the world would I pack my bags for a medical adventure abroad?” Well, my friend, it turns out that international healthcare is like the hidden gem of the retirement planning universe. Picture this – medical care that’s often just as good, if not better, without the red tape of the U.S. Food & Drug Administration and health insurance companies doing the cha-cha on your medical decisions.
And the cherry on top – the costs! Abroad, you’ll find medical procedures that won’t send you running to pawn your favorite heirloom to cover the bill. No armies of attorneys frothing at the mouth, no bureaucratic hurdles, just affordable healthcare wrapped in a vacation package.
Let’s talk numbers – a hip replacement in the U.S.? Brace yourself for a whopping $32,000. Imagine getting the same hip upgrade in Belgium for 9,496 euros (or $10,473 U.S. dollars), plus roundtrip tickets for less than $700. You could have a hip replacement and a holiday in Belgium for half the cost. Talk about a win-win!
As of November 2013, medical tourism was a $40 billion industry, growing faster than a teenager during a growth spurt. In a recent study, 29% of seniors and a whopping 51% of millennials were ready to jump on the medical travel bandwagon.
Now, a word of wisdom – do your research and math because prices are like squirrels – always changing. Factor in other expenses like travel, hotels, and food. The point is, consider medical tourism as the superhero cape in your retirement planning, ready to swoop in and save you money. Just make sure you plan for the adventure and the costs – because a healthcare vacation is only fun when planned!
Retirement housing in retirement
We all dream of spending our twilight years living it up on the lanai with our besties – a retirement fantasy worthy of a sitcom! Sadly, life doesn’t always imitate art, and choosing the right spot for our golden years becomes a crucial decision. After all, the difference between a retirement resembling The Golden Girls and one akin to Grumpy Old Men lies in the address we choose – because, let’s face it, not all lanais are created equal.
Next, there’s the world of senior living – where assisted living facilities offer concierge-level service, possibly with a side of spa treatments. At the same time, nursing homes boast 24/7 medical care because who doesn’t love a good bedside manner from a nurse?
Here’s the kicker: assisted living might cost you a pretty penny, with fees reaching the heights of $80,000 a year or a monthly bill that could make your hair turn gray faster than your retirement planner. And let’s not forget that some of these facilities might not be as LGBTQ-friendly as your favorite hair salon.
So, in this retirement chess game, planning and buying long-term care insurance becomes your secret weapon – the knights in shining armor protecting you from financial checkmates and awkward situations in senior living facilities.
Planning to stick around in your current abode until they need to roll you out like a red carpet? Well, then, it’s time to spice up your retirement plan with the possibility of turning your home into a fortress of immobility, complete with all the fancy bells and whistles.
With the growing number of seniors in the U.S., housing options have multiplied faster than conspiracy theories on the internet. Including discussions about your long-term care and housing needs in your retirement plan showcases your forward-thinking skills and saves your loved ones from playing a high-stakes game of decision-making charades on your behalf.
And speaking of long-term care – ah, the cliffhanger.
Long-term care insurance
The next most critical thing you need is long-term care insurance (LTCI) – the financial superhero that swoops in when you need help with personal care, like a guardian angel for your golden years. It’s the kind of insurance you might stash away in a drawer labeled “Break Glass Only in Emergencies” until the day you discover it’s your turn to don the golden robe of seniorhood.
Now, here’s the kicker – AARP claims there’s a whopping 68% chance of becoming a card-carrying member of the “I-need-long-term-care” club once you hit the majestic age of 65. That’s right, folks, we’re talking about a high probability of needing a little extra TLC in our future – because let’s face it, even financial superheroes need backup plans.
Examples of financial plans for retirement
We’re talking about financial planning for retirement, but what does a retirement plan include? How do you know you have all the right parts in the right place?
Let’s discuss this.
Financial plans for retirement typically include:
- a retirement strategy
- a risk management plan
- a long-term investment plan
- a tax reduction strategy
- an estate plan
Crafting your retirement plan is like putting together the ultimate financial jigsaw puzzle; lucky for you, we’ve got the pieces. First up, the retirement strategy – your roadmap to comfort in the golden years, including those nifty daily-, short-, and long-term financial plans we’ve laid out above. Now, enter the risk management plan – your shield against financial dragons, featuring Long-term care insurance, health insurance, and life insurance with more riders than a cowboy on a cattle drive. Next, the long-term investment plan – gazing into the crystal ball five years or more into the future, makes it the unsung hero of this article for most readers.
But wait, there’s more – the tax reduction strategy, your secret mission to outsmart Uncle Sam. Utilize company-sponsored and individual retirement plans, invest in municipal and treasury bonds, and dance with legal loopholes like selling lost stocks to dodge those pesky taxes. Lastly, the estate plan – your grand finale, a strategic masterpiece that involves wills and life insurance policies, ensuring your assets play a perfect endgame.
Consider this your cheat sheet, your guide to the financial symphony of retirement. So, buckle up, because creating your retirement plan is about to become the most thrilling puzzle-solving adventure of your financial life.
Can I retire early?
The F.I.R.E. movement – where Financial Independence/Retire Early isn’t just a goal; it’s a lifestyle, a rebellion against the 9-to-5 shackles. Picture this: folks striving not to be seasoned retirees sipping tea on the porch but aiming to start their golden years in their 30s, 40s, or 50s, embracing a life where their boss gets an early retirement from being their boss.
Now, the term “retire” in F.I.R.E. is as loose as a toddler’s grip on their ice cream cone – some still work, but it’s on their terms. Think virtual businesses, juggling real estate like a pro circus performer and making money rain through dividend investments. To prepare for this early retirement fiesta, they aim for a net worth 25 times their annual expenses – a financial trapeze act we’ll delve into shortly.
In their quest for FIRE, these enthusiasts hustle harder than a squirrel storing acorns for winter. They pay off debts like it’s a game show, create more income streams than a DJ at a techno festival, and save and invest like money grows on trees. Some even embrace a minimalist lifestyle, living in tiny houses or RVs – because, hey, who needs space when you’re busy embracing financial freedom?
But hold on, before you embark on this FIRE journey, there’s a critical step – figuring out your “why.” Is it to flip off your boss, wander the globe, or just spend more time with your partner, children, or maybe both (no judgment here)? Once you’ve answered the existential “why,” the rest is simple math – pump up the money flow, shrink the money outflow.
Notice a theme? It’s not just about retiring early; it’s about rewriting the script of your life, turning financial independence into your own blockbuster movie.
Decrease your outflow by:
• Cutting and reducing your housing costs
• Cutting auto expenses
• Lowering insurance expenses
• Cutting non-essential spending, such as magazine subscriptions, app services and cable
• Paying off credit card and student loan debt fast
• Becoming meticulous about grocery expenses and reducing or eliminating dining out
Can I retire on $1,000,000?
$1,000,000 – the golden ticket, the Willy Wonka’s Chocolate Factory of retirement dreams. But hold on to your top hats because deciding if a million bucks is enough to retire is a bit like trying to fit a giraffe into a Mini Cooper – it depends on a few variables.
First, the average life expectancy in the US is a sprightly 79 years – or, as some would say, 79 trips around the sun. Now, let’s throw in some numbers for fun – a 7% investment return and a 3% inflation rate because nothing says retirement planning like playing with percentages.
Quick reality check – the Bureau of Labor Statistics says the average cost per year in retirement is $49,000, and according to Fidelity Investments, healthcare expenses for a couple who retires at 65 is a cool $285,000. Hold on to your wallets!
Assuming you’re not planning on leaving a financial legacy to heirs or charities, if you work until the ripe age of 66 and enroll in Medicare, you’ve got a delightful 13-year retirement awaiting you with that million-dollar nest egg. Doing the math dance, you’d have $96,000 a year to splash around (in today’s dollars), plus a sweet $48,600 from Social Security – cha-ching!
But beware, my frugal friend, because managing expenses in retirement is a bit like juggling flaming torches – not always easy. So, if you decide to retire earlier or live longer than 79 years, you might need to tighten that financial belt. It’s a retirement rollercoaster – grab your calculators and hang on for the ride.
Can I retire at 60 with $500,000?
The mystical $1,000,000 is the golden fleece of retirement aspirations. It’s like trying to catch a unicorn – magical, but not everyone gets to ride one into the sunset. Fear not, my financially frugal friend, for there’s a more achievable number in town – the $500,000 retirement target. It may not have the same ring to it, but hey, it’s a bit like aiming for a comfortable sedan when the sports car is out of reach.
Now, can you retire on half a million bucks at the ripe age of 60? Drumroll, please – the answer is a resounding “Yes!” Imagine a retirement filled with the sweet symphony of $36,284 a year for 19 glorious years. That’s right; the conservative assumptions are back – 7% annual investment return, a 3% inflation rate, and a retirement span until 79. It’s like financial jazz, baby.
But wait, there’s more! To spice things up, Social Security joins the party, but beware – you can’t start this shindig until at least 62. And when you do, it’s like getting 70% of the original monthly benefit because who wouldn’t want a discount on government perks?
Sure, living off $36,284 for the first two years might feel a tad snug, but it’s like squeezing into those skinny jeans – doable with a bit of wiggle room. Opting for Social Security at 62 means smaller checks for life, but hey, it’s the retirement waltz – one step at a time, my friend. So, tighten those financial shoelaces and dance your way through the expenses – you’ve got this.
1. Manage your day-to-day spending
A budget is the grown-up’s version of hide and seek with money. Turns out, most of us have a couple of sneaky expenses that play hide-and-seek with our budget, like elusive ninjas in the world of spending. Taming these budget bandits not only saves the day but does so without turning our lives into a financial ninja warrior training camp.
And for the grand finale – enter the budgeting app, the hero of day-to-day expenses! It’s like having a financial sidekick that keeps your spending in check, making sure your money doesn’t pull a disappearing act faster than a magician’s rabbit. Budgeting app, you’re the real MVP in this financial circus
2. Consider moving
For community and safety, LGBTQ people often gravitate to expensive cities to live, and that costs us. If you’re planning on living on less than $50,000 a year, trying to live in San Francisco, Chicago or New York City will erode your savings.
Therefore, consider moving. Consider moving to a cheaper house, a cheaper apartment and a cheaper city.
3. Become debt free
Finally, pay off all your debt. The truth is that debt anchors your future earnings and income to your past.
Do you really want those fancy jeans from 15 years ago or that trip – as memorable as it is – from your 20s to ruin your chance to retire on your terms? No, you don’t, but most gay men say that their credit card debt is their biggest inhibitor to a successful retirement.
Don’t let that be you.
We’ve outlined the steps of our exclusive Debt Lasso Method here to help you pay off credit card debt faster than any other strategy – yes, faster than the Snowball or Avalanche methods.
Plus, it’ll help you save more money and improve your credit score more than any other plan you’ll find anywhere.
Social Security benefits is like the world’s slowest magic trick. You’re eligible to start receiving the monthly Social Security extravaganza at age 66 or 67, depending on when you decide to take the plunge into retiree bliss. But here’s the kicker: every year you hold off, your Social Security check grows by 8%, like a fine wine maturing with age, until it hits its peak at 132% by age 70. It’s the ultimate game of patience – the longer you wait, the more dollars magically appear in your monthly check.
Now, if you’re playing the odds game with your lifespan – whether you’re expecting to outlast a tortoise in a race or planning to enjoy the early bird specials – that determines when you should cash in on those Social Security benefits, take the plunge early if you’re aiming for the “live fast, die young” lifestyle, but if you’re in it for the long haul, delaying the gratification until age 66 or 67 might be the savvy move.
Now, enter the plot twist for same-sex couples – the infamous marriage subplot. Surviving spouses could be sitting on a treasure trove of Social Security Survivor and Spousal benefits, potentially worth a small fortune. But here’s the catch – you’ve got to tie the knot! Yes, the secret to unlocking this financial jackpot is saying, “I do.”
But hold your confetti – there’s a caveat to the caveat (because nothing in finances can be simple, right?). If you’ve ever danced in the government’s tango, especially as a teacher in a public school, some states don’t contribute to the Social Security system. This triggers the arrival of Social Security Offsets, the WEP, and GPOs, sneaky characters that could turn your potential $1,000,000 windfall into a puff of smoke. Ah, the complexities of financial romance.
Retirement planning conclusion
And there you have it – the grand finale of our retirement planning extravaganza. We’ve covered more numbers than your accountant on a caffeine high, dissected more strategies than a chess grandmaster, and sprinkled financial wisdom like confetti at a retirement party. If your brain is buzzing with more numbers than a bingo night, fear not – you’re not alone.
Remember, planning for retirement is like preparing for a marathon, except you’re competing against Father Time. So, go ahead, flex those financial muscles, invest wisely, and remember, laughter is the best medicine, especially when facing the uncertainties of retirement. Who said financial planning can’t have a sense of humor? Now, go forth, future retirees, armed with knowledge and a dash of wit, and make your retirement the blockbuster sequel to your working years! Cheers to financial freedom and endless sunshine in your golden years – may they be as bright as your favorite sequined retirement shirt.
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