- Retirement Planning
- Retirement Account
- Social Security
- Student Loans
1 Retirement Planning
They’re close to retirement and talk about what you need to do in order to establish a retirement plan./
when you’re in your 40s your 50s in your 60s and you don’t have one yet so the first thing you need to do is determine how much money you’re going to need to retire.
You want to figure out this number because that’s going to determine how much you need in investments in order to retire .
,Now don’t get overwhelmed doing this .What you want to do is just put forth your best guess estimate .
Now there are a couple different ways to do this. but one calculator that we’d like the most is smart assets comm they’re calculator in our opinion seems to be the most accurate so.
Now that you figure out how much money you need to retire/. you want to start contributing to your retirement accounts even if you never have before in the past ,you can start right now and open up a traditional or Roth IRA.
2 Retirement Account
.If your employer is not providing you with a retirement account and if your employer is providing you with the retirement account, start contributing and start contributing as much as possible.
.Now when we’re talking about contributing as much as possible use your age as an advantage.
So if you’re 50 years or older you can actually contribute more to your 401k and to your IRA
.If you’re 50 years or older for your 401k you can contribute up to $25,000 a year and for your IRA.
You can contribute up to $7,000 a year .I mean that is a lot of money that’s 32,000 dollars a year that you can contribute to your retirement accounts and see that is a big deal because what that does it ,
It can reduce your taxable income significantly so that means more money to invest in your retirement accounts. There won’t be text now that you’ve maxed out your contributions to your 401k and your IRA.
The next thing you want to do is open up a separate brokerage account and begin investing in a target date fund.
Target date funds are designed to reduce the volatility in the market .
They use a specified date to determine whether or not you should be investing more in equities or in bonds.
Now you don’t have to do a target date fund. That is just something that we are recommending 02:11 because it is very easy to do the allocation for you based on your age. and when you’re expected to retire
It does very frequent rebalancing for you now. you can do this on your own in a general index fund .
if you want to but if you don’t feel comfortable with rebalancing your portfolio a target date. funds are a great way to go now you’re probably thinking ,how is it that
I’m gonna be able to max out my retirement accounts and open a brokerage account and start putting money into that. don’t worry about that,
Just yet what we want you to focus on right now is devising this plan
.I am going to talk about how you can reduce your expenses and increase your income so you can get to this point
This should be your overall goal. The third thing you want to do is assess what retirement income you’re entitled to .
.when we say entitled, we’re talking about your social security and your pensions
3 Social Security.
Now let’s talk about Social Security your Social Security .
if you paid into it you are entitled to it now there’s a lot of controversy about whether or not
Social Security will be around ..we’re not going to get into that but what you should do is go to the Social Security Administration’s website and get a copy of your Social Security Statement now.
If you go online to the Social Security Administration website .you can find how much you’d be collecting at different ages so at 62 that’s the earliest ,
you can begin collecting Social Security. but you’re gonna do that at a reduced rate and that 66 or 67.then you can collect Social Security at a hundred percent but if you wait until you’re 70 .
You can actually collect Social Security at a rate of one hundred and thirty two percent .
So you want to figure out what that payment would be at different various ages in your life .now let’s talk about pensions .
you may have a pension in your current job or you may have a job that you worked out previously that you’re entitled to a pension from a lot of federal or state government jobs
If you’ve worked at them for a period of five years they’ll offer you a pension. so you want to research that and find out
if you’re entitled to a pension also so the three things we’ve just talked about are gonna set the stage for your late retirement planning.
What we’re going to talk about next is reducing your expenses and increasing your income.
This is going to be the hack that’s going to get you to retirement comfortably now.
If you want to retire comfortably ,you’re going to have to make some sacrifices.
That means looking at your budget cutting costs and using that cost that you cut in order to invest now
.You want to look at your budget line-by-line because there are definitely areas that. you should be able to cut and use that money to invest so after you’ve gone line by line and cut little things from your budget.
You want to go after the big-ticket items like your housing. housing represents almost 30 percent of most people’s budget,
Now being able to cut or reduce your housing costs will accelerate your savings tremendously.
you can save and invest a lot more by reducing those costs . how we save 70 percent of our income and a large majority of that is because we live rent is mortgage free so there are a number of ways to reduce your housing costs.
You can house hack, you can put a rule on Airbnb. you can put your whole house on Airbnb when you’re not using it.
There are so many different ways in fact when I was first out of college
I lived with a woman and her son. that were renting a room out. they were saving a significant amount of money for the mom’s retirement.
There’s more than just renting a room out or renting out your property. there’s other considerations that you can make such as downsizing.
If you live in a huge house or even a house that’s bigger than what you need you can downsize . save money in that way another option is to move to a lower cost of living area.
we’re from California and people do this all the time.
They’ll move from California to Nevada or California to Iowa .They’ll move to places where it’s cheaper for them . they can save that money and use it towards their retirement .
The third thing you want to focus on is not obtaining any new additional debt now that goes without saying but
I think people think a lot about debt. they’re thinking about new cars and new homes, which is really obvious, but one of the big things.
6 Student Loans
We want to discuss taking on debt in the form of student loans for your children. old people are not gonna like this okay because as parents . we’re parents too.
You feel this obligation to pay for your child’s education and too many times we see people trading off their retirement for their children’s education .
This is something that if you’re in this situation, you should take a hard look at because you cannot borrow or get a loan for your retirement ,
which your children can borrow or get alone for their education. so the concept goes like this consider someone having to take out a loan for your child it’s either gonna be. you or it’s gonna be your child as the student
If you take up a loan you’re delaying your retirement by X number of years ,but if your child takes out the loan. they have a lifetime to repay
that loan you have a much shorter span to repay the loan and reach retirement so the idea is don’t take on that additional that your child doesn’t have to take on debt .
If it comes down to someone taking out the loan it should be your child and not you now our advice seems really harsh .
we’re talking about not paying your child’s education and focusing on yourself in your retirement instead
.Put the reason why we’re giving this advice is because we’re taking it from the viewpoint that you have not invested any money in retirement.
whatsoever so you need to be throwing money towards retirement .So that you can eventually retire so you are cutting expenses.
you are avoiding debt but you need to start generating income
.One of the most important things you can do and we talk about this .all the time is starting a side hustle at a minimum .
we’re saying 10 hours a week start this side hustle go into something that you enjoy though because this may be one of those side hustles that you do after you retire that actually supplements your retirement .
So take a look or maybe pursue a passion that you have always wanted to do and the last thing is to stay positive .
Well. we get this question about I’m so late in life and I haven’t been saving for retirement.
They seem to be very pessimistic types of questions. But I think what People are failing to realize that life is very long.
You can live to be 80, 90 , 100 years old . If you haven’t saved and you’re 50 years old,
We talked about becoming financially independent in less than 10 years by the time you’re 60.
you’ll be financially independent so what we want to do but to also give you hope because there are a lot of things that you can do now that will set you free for a very long long time.