When you're looking at retiring, it's important to properly judge and budget for the lifestyle you want to maintain in your golden years. Finding the right amount to have in your savings account depends on several factors. Where you want to live, your lifestyle, and your retirement goals must be considered when deciding when to retire and how much you have to put back in liquid assets.
Do you want to travel? Do you have managed care that needs to be considered? Are you going to be responsible for aging parents or young children? Do you have children who will be in college when you’d like to retire? These questions are essential when deciding whether or not you can retire with $500,000 in liquid assets.
If you choose to retire once you’ve reached that $500,000 in assets, here are five ways to make that money work for you so retirement can be your golden years.
5) Social Security
The longer you wait to claim social security, the more money you’re likely to claim in monthly benefits. The minimum age to take your social security benefits is, as of 2022, 62 years old. For every year past that you wait, however, you’re likely to get an 8% increase. If you hold off and take social security at 70, you’ll significantly increase the amount you can draw on, especially if you have a well-paying job and keep working during that ten-year gap.
4) Cut Unnecessary Spending
Anything that can be saved should be saved. Learning to live on less will help you stretch your retirement assets much further. Shopping clearance items, only buying things you absolutely have to purchase, and generally being frugal can help you in the long term.
This might mean you eat out once a week instead of several times a week. Or you might tighten on impulse buys and learn to use a budget more carefully. Whatever you do, cutting your spending will significantly increase your chances of retiring comfortably on $500,000.
3) Pay Off Debt
It might seem like a no-brainer to chop up credit cards and pay off any outstanding loans, but these things really do need to be done before you set yourself up to retire. Pay off your cars and house, ensure your student loans are taken care of and that any other outstanding debt is comfortably in hand.
So, your money can go further when you stop working full or part-time. Doing this will ensure your retirement savings don’t get nickeled and dimed to death by unnecessary payments and high-cost insurance needs.
2) Moving On
Sometimes the places where we raise our children aren’t the best places to retire. If you chose an area with great schools and a higher cost of living, it might be time, now that your kids are all grown up, to move to an area with a lower cost of living. Even if you stay in the same area, do you need a house big enough to raise a family in? Or can you survive with just a one bedroom, or maybe a condo with a guest room for vistitors?
Sometimes traveling can also hold the key to making your U.S. dollars stretch. Currency exchange rates can help your American money go further, allowing you to see parts of the world you might otherwise have missed out on.
1) Side Hustlin'
Finding a side hustle when you retire can be a two-fold benefit. First, it can give you something to do in the monotony of retirement. It can also provide a nice side income to cushion your retirement savings. It doesn’t have to be complicated either. Usually, a hobby is easy to turn into a little extra income.
Painting, mowing lawns, power washing services, shoveling driveways, or gardening work can all be income hobbies. These activities you enjoy doing for yourself can easily be turned into income when you offer to do them for neighbors or others you come into contact with.
Certified Financial Planners
Retiring with a $500,000 portfolio is very attainable. But knowing when to retire and how to do so is critical to successfully exiting the 9-5 grind. Talking with a certified financial planner will help you map out what your retirement should look like. And starting now, before you’re ready to retire, can make sure you’re on the right path.
Certified financial planners and other financial professionals can help you conquer any outstanding debt. They can also show you how much you’ll need to save each year to reach your retirement goals. This can ensure you enjoy a less stressful and more relaxing time as your retirement draws nearer.
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