7 Personal Finance Facts To Know Before You Retire
For many, retirement is the ultimate financial goal. After decades of hard work — and hopefully savings — it’s time for a new, relaxing adventure.
But before you head into retirement, there are several personal finance facts to keep in mind to help make sure the transition goes smoothly.
Get The Facts About Personal Finance Before Retirement
1. You May Need To Save More Than You Think
Many people live decades in retirement. While 62 is the average age to retire, life expectancies commonly reach into the mid-80s, meaning you may need to stretch your savings for two decades or more after you retire.
One of the most important personal finance facts is that you should start saving sooner rather than later. Keeping in mind that you may need to cover at least 20 years of income in your retirement. So, save wisely.
Many financial experts say that the way to go is maintaining a financial portfolio that is a healthy mix of large-cap U.S. stocks, U.S. bonds, small-cap U.S. stocks, and cash. Such a mix can provide a comfortable living for as much as 40 years during retirement.
2. You Cannot Rely On Social Security Alone
Social Security has a long history of helping millions of Americans in retirement, but for the majority of people, it simply does not provide enough cash to live comfortably. In 2022, the average benefit to individuals is just $1,657 a month. That’s under $20,000 a year.
3. You Need To Think About What You’ll Be Doing In Retirement
One of the most overlooked but very important personal finance facts is tailoring your savings to fit the lifestyle you intend to have once you retire. Blindly saving won’t be entirely helpful if it doesn’t consider your specific plans.
Think about the recurring expenses you may still have after retirement, such as a car payment or mortgage. Do you plan to travel? If so, you will need to fit those plans into your budget. Will you want or need to take a part-time job? All of these situations should have a role in developing your retirement savings plan.
4. Think About The Cost Of Medical Care
A big post-retirement expense is often medical care whether it’s treating a chronic illness or simply needing more care as you age. Many forget to factor in the rising cost of medical care as part of their retirement savings, but this is something that you can begin to plan for at a young age.
Look into whether your employer offers a long-term medical care plan, such as covering medical costs for life if you’ve stayed with a company for 20 or 30 years. Consider this: On average, a couple requires $300,000 to pay for healthcare in retirement.
5. Pay Off Huge Expenses
One of the most universal personal finance facts is having at least a few major expenses throughout your life. This is usually a car or a home — and this is something to consider paying off in full before you head into retirement.
While it’s not the end of the world to have such costs when you retire, paying them off leaves more room for unexpected expenses, such as medical care or home repairs.
6. Shoot For $650,000
According to the Motley Fool, a good target amount for retirement is about $650,000 on average. While pensions used to cover most of this amount in retirement, they are no longer common and have been replaced by strategic savings.
Most financial planners recommend having enough savings to take out 4% of it each year during retirement. That number will likely increase in the future.
7. Consider Alternative Ways To Help With Unexpected Expenses
Financial emergencies don’t stop when you enter retirement. In fact, they can be even more financially devastating when on a fixed income or when you’re planning for retirement.
What Is A Payday Loan And How Can It Help?
A payday loan is designed as a short-term loan offering a small amount of cash, usually paid back when you get your next paycheck. If you’re planning for retirement and need help between paychecks, you may qualify for a payday loan of up to $550 from Carolina Payday Loans, Inc.
It can take as little as 30 minutes to qualify. Start online, fill out the short loan inquiry form, and one of our representatives will give you a call to outline the next steps and walk you through the process.
Once you qualify and are approved for a loan, you can get the cash you need the same day or the following business day.
Get Started Today
Before retirement, there are several important personal finance facts to understand and consider. If you need help with a sudden financial emergency that threatens to eat up a chunk of your retirement savings, be sure to consider a payday loan. Start on our homepage, give us a call, or visit us today to learn more.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.