The coronavirus pandemic has impacted everyone’s lives, both directly and indirectly, whether you or a loved one have personally experienced the illness, had life events cancelled or adjusted, or faced financial hardship due to the global situation.
While going forward we will all continue to make changes in our lives due to the pandemic, that does not mean you cannot make any plans for the future.
Here are several good reasons to take the time now to create a plan for funding your retirement bucket list, and six tips to budget for it.
Early Retirement Spending
When planning your retirement bucket list, expect to spend a lot of your money in the earlier years of retirement while you are still fairly young, healthy and mobile. Developing a targeted plan now can help prepare you to balance your spending properly during your retirement years.
If you are planning to travel and spend more at the start of your retirement, then you can reduce market risk and spread your savings across multiple channels by purchasing an annuity or permanent life insurance; have a conversation with your financial advisor about the best option for you.
While you would love to do it all, establishing priorities ahead of time is key. Do you want a larger home so that family can visit or would you prefer a smaller house with the ability to travel more? Figure out what your ideal retirement life looks like when creating your retirement plan and bucket list.
Spending Without Guilt
Many retirees are reluctant to take trips and cross off their bucket list due to fear of overspending. Spending too much on trips could make it difficult for them to maintain a steady living during the rest of their retirement or be able to leave assets for their children. Creating a thorough, targeted plan well in advance can help you enter retirement with confidence in your spending strategy so you can do it all - responsibly.
Tips for Funding Your Retirement Bucket List
Tip #1: Build a Strong Retirement Plan
It’s never too early to start saving for retirement. Make sure you have a 401(k) or IRA set up that you can begin contributing to, if you don't already; this will become the foundation for your retirement plan.
Tip #2: Create a Passive Income
Passive income is earnings that you aren’t actively managing - or at least have very little effort in managing. An example of this is something like having a rental property, having a downloadable eBook, managing a website, etc. When you have a passive income, you are able to earn extra income while being able to focus on your actual job, adding an extra boost to your earnings that you will appreciate.
Tip #3: Eliminate Credit Card Debt
It is unfortunately too easy to allow credit card debt to accumulate. But eliminating interest payments, especially on cards that do not require you to carry a balance, can increase your ability to add more to your retirement savings. Start by paying more on your highest interest credit cards until you have those paid off, then work your way down to the other lower-interest earning debts.
Tip #4: Open a Money Market Account
Is a money market account the right choice for you? These are easily accessible, and usually offer a higher return than a standard savings account. Check with your local bank, begin your own research, and discuss with your financial advisor to identify one that may work best for you.
Tip #5: Lower Your Monthly Bills
Make it a habit to check for unknown charges on your bills. If you see a charge you do not recognize, call the company for an explanation. Try to find the best deals and rates for things such as insurance, internet and cable.
Additionally, you can work to cut costs inside the home by doing things such as:
- Checking your thermostat to ensure you’re not wasting heat or air conditioning.
- Changing the filter regularly to help your units run more efficiently.
- Lowering your water heater temperature.
- Unplugging your unused electronics.
- Using cold water when doing your laundry.
These things may seem small, but over time they can produce significant cost savings.
Tip #6: Create a Three-Month Emergency Fund
Setting aside enough money to live on for three months can seem like an enormous hurdle, but when combined with the previous tips listed, you may find yourself saving even more than expected. Start slowly by paying down credit card debt, lowering bills and putting anything extra towards your emergency fund. An emergency fund is essential for anyone, as it allows you to survive necessary unexpected costs like car repairs, home repairs, health bills without dipping into your paycheck and savings.
You have worked hard to save for retirement, so despite the difficulties caused by the pandemic, it is important to continue those efforts however possible and plan to enjoy the fruits of your labor in the future. If you work with your financial advisor to create a structured retirement plan, you can still hope to reach your financial goals and experience every single thing on your bucket list.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.