If you’re thinking of leaving the workforce and settling down in your dream home in the next few years, make sure your financial house is in order.
Predicting future economic conditions that are decades away can be difficult, but there are steps you can take now that will help insulate you and your retirement funds from excessive expenses after you’ve retired.
Maximize contributions
Take advantage of your employer-sponsored retirement plan by saving the full amount you can right away.
Every dollar you stash away will grow tax-deferred to help give you more funds down the line. If your company matches a portion of your contribution, it’s best to get the most out of that benefit while you still have a reliable income stream.
Stick to your strategy
If you have a “game plan” in mind, you may be one step ahead of many other soon-to-be-retirees. Look at your retirement funds and determine what you need to do to maintain your current retirement trajectory or modify it to help hit your target.
Don’t let one-time unexpected expenses throw you off track or you may start forming a habit of withdrawing money from your savings unnecessarily.
One key to greater retirement funding success is to start putting aside retirement funds early and increase the amount of money you put away each year.
For instance, a raise can be immediately funneled into your 401(k), thereby taking you back out of a higher tax bracket. From time to time, you can voluntarily live on the amount you project your budget will be in retirement for a few months, to see if that amount will be enough for your lifestyle.
Set up an emergency account
One wise way to help ensure that you are financially stable is to establish and grow a separate fund for emergency expenses. This will deter you from depleting your basic retirement funds in the future, while also providing a much-needed resource to cover temporary costs.
This account can be used for any life-altering event, such as a medical emergency, an unforeseen capital expenditure, a family illness or an unexpected relocation.
Expand income options
Your retirement funds should increase over time, with several different options available to you post-retirement. Rather than keep the majority of your money in only a few financial vehicles, look for alternative ways to establish an income stream once you’ve retired.
Used in conjunction with other funds, these options can provide you greater financial confidence in later years.
Joshua Mellberg is an investment advisory representative and licensed insurance agent. He is a sought-after speaker on retirement income planning strategies who has been featured on CNBC, PBS and Yahoo! Finance. After graduating from Western Michigan University with a business management degree, Josh started J.D. Mellberg Financial, where he vowed to always offer clients a wide array of proven retirement products and services to help protect and then manage their assets to fit their goals.
[The content provided through this article and www.nydailynews.com should be used for informational purposes only and is not intended to be a substitute for professional advice. Always seek the advice of a relevant professional with any questions about any financial decision you are seeking to make.]
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