If you can’t rely on social security, making alternative retirement plans is a good idea. Starting in 12 years, retirees will receive 78 percent of their expected social security benefits in the US. That’s according to a recent trustees report.
It’s not too early to begin preparing for retirement, especially if you are facing a reduced social security benefit. Here are some tips for planning your retirement without social security income.
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Remove Social Security From Calculations
If you might face retirement with reduced social security benefits, removing the benefits from your calculations is a good idea. Calculate the amount of money you expect to need every month when you retire. When you look at retirement benefits, include pensions or any savings plans you have right now.
When you remove social security benefits from your retirement plan, you may have to save more now to make up the shortfall. If you have a longer timeline before retirement, you have time to build your savings. If you are closer to retiring, you may need to take steps to ramp up your savings and reduce spending now.
Focus On Building Wealth
Most people look at the income they hope to receive when they retire. Another great strategy when saving for retirement is to think about building generational wealth. That type of wealth focuses on financial assets you pass down to the next generation.
Financial assets may include property and other investments. Improving generational wealth also includes providing an education for the next generation and teaching them habits and values that will serve them well. For strategies to build generational wealth, check out bottofinancial.com.
Reduce Costs and Maximize Savings
Learning how to save for retirement is a two-step process. The best way to save more is to lower your expenditures. Track your current expenses and look for realistic ways to reduce them. Then shift that money into a savings plan to boost your retirement income.
Increase your 401k contributions when you can. Max out your Roth IRA contributions if you’re eligible. Your extra 401k contributions may trigger increased employer contributions.
Create an Investment Strategy
Planning for retirement includes having an investment strategy. Build a diversified portfolio with some safer investments, as well as some riskier choices. This will help increase your return on your investments.
Stocks are suitable for investors who have years before retirement, as they generally have a higher return to offset the higher risk. There’s more time for an investor to recover if there is a downturn in the market. As you get closer to your retirement, shifting to a more conservative portfolio is best.
Preparing for Retirement
Now that you understand how important it is to have a plan, you can begin preparing for retirement right away. Retirement without social security may sound daunting to many, but you’ll be ready because you included that fact into your retirement plan.
Did you find this article helped you decide to get started with your retirement plan? If so, check our other helpful investment articles for more ways to create financial wealth. Did you find this article helped you decide to get started with your retirement plan? If so, check our other helpful investment articles for more ways to create financial wealth.
