Were you the kind of person that meticulously planned out the details of their retirement plan by the age of 30? If you answered no, you are not alone. Few put a lot of thought into budgeting for retirement at such a young age.
This is a major reason why so many people find themselves in an uncertain financial position at retirement age and have to delay their retirement plans for several years. Not financially ready for retirement? These tips from MRE Finance can help you on your retirement journey.
Pay Off Your Debt
Paying off debt, like a mortgage, credit cards, medical expenses or car loans often constitutes a major portion of your budget. Debt can be a huge obstacle to overcome when trying to save for retirement so it’s important to keep this in mind as you prepare to retire.
Reducing your debt as much as possible before retiring should be a primary goal. If you’re still working and contributing to a 401(k) or another retirement account, paying off your debt might seem like you are shortchanging your retirement savings, however, paying off high interest debt may help you retire sooner than putting that extra money into your retirement account.
Using a debt repayment calculator to determine the best method of paying off your debt is a useful tool and there are many available online. We also recommend consulting with your financial advisor to help guide you towards your retirement goals.
Track Your Expenses and Manage Your Finances More Efficiently
The best way to determine if you’re ready for retirement is to understand your monthly expenses. There are several expense tracking apps, such as Mint (intuit) that will help you keep track of all your monthly expenses. You can use it to set goals for different areas of your budget including retirement savings. You can also use it to create a budget that shows how much you’ll need to save towards retirement each year.
If you’re employed and contributing to a workplace retirement account, like a 401(k), monitoring your expenses will help you determine if you’re saving enough. This is especially true if you’re younger and are working hard to save enough to retire early.
Review Your Portfolio and Make a Plan
If you’ve been saving for retirement, you may be concerned that you don’t have enough saved. You may also be worried about inflation or a market correction that could cause you to delay retirement. A market downturn can be painful, but it can also be an opportunity to invest. CNBC reports that only “18% of Americans plan to increase their stock market investments this year”.
Reassess your portfolio to make sure it’s still in line with your retirement goals. If you are still working, you may be able to borrow funds tax free from your 401(k) to pay off high interest debt. You will have to repay those funds with interest, but you’ll be paying yourself the interest. If you at retirement age or older, another option is selling your life insurance policy. Selling your life insurance policy not only eliminates the expense of premiums, but provides you with a lump sum payout that can be used for anything you choose. We recommend working with a professional financial advisor to provide guidance for your situation.
Get an Estimate of How Much You’ll Receive from Your Pension and Social Security
Retirement can be an uncertain time financially and it’s important to know how much you’ll receive from your pension/s and or Social Security.
The Social Security Administration offers an online benefits and retirement planning calculator that provides you an estimate of what your Social Security payments will be. Also check with your employer to determine how much you’ll receive from your pension/s. In addition to your pension/s and Social Security, there are other options available to supplement your retirement such as a life settlement for those over 65 years of age.
Take Advantage of Tax-advantaged Accounts Before You Retire
Retirement is an important goal to save for but it’s also important to set money aside for emergencies. If you’re still working and not ready for retirement just yet, you may want to consider tax-advantaged savings accounts. “The term “tax-advantaged” refers to any type of investment, financial account, or savings plan that is either exempt from taxation, tax-deferred, or that offers other types of tax benefits. Examples of tax-advantaged investments are municipal bonds, UITs (Unit Investment Trusts), and annuities. Tax-advantaged plans include IRAs and qualified retirement plans such as 401(k)s.” (Investopedia)
Other types of accounts include health savings accounts (HSA), health reimbursement accounts (HRA), 403(b) and 457(b). Work with a financial advisor to determine which accounts are best for your situation.
Planning for Retirement is Important
It’s important to plan for retirement ahead of time otherwise, you could struggle financially during retirement. As people get older, their expenses typically don’t get much lower. In fact, many seniors find that their expenses increase after they retire. Medical and long-term care expenses are expensive and should be prepared for.
If your goal is to buy a yacht, a second home or travel, planning for retirement ahead of time allows you to save up enough money to fulfil your dreams and retire in style. The key is to start saving and investing your money as early as possible. Investment options can range from investing in stocks, bonds, annuities, or real estate to accumulate wealth and passive income during retirement.
Is it too Late to Finance Your Retirement?
It may surprise you to hear that according to USA Today and the Associated Press that “1 in 4 Americans never plan to retire”. At this point, you might be wondering if it’s too late to finance your retirement. For those of you that are already 65 or older and feel that they have too much debt or not enough savings, you should know that it’s not too late.
Option? Call MRE Finance and Retire in Comfort
If you are 65 or older and own a life insurance policy, you can sell that policy for a substantial cash payment. This is called a life settlement and the funds from the sale can be used to supplement your retirement, pay for medical expenses or for whatever you choose.
What is a life settlement? A Life settlement refers to the legal transaction between the life insurance policyholder and a third-party buyer known as a “settlement provider” for an upfront payment. Life settlement cash payouts are always more than your policy’s cash surrender value but less than the total death benefit of the policy. Some of the reasons people choose a life settlement include unaffordable premiums, medical bills, supplementing retirement, emergencies, or if they no longer need the policy for their dependents or other personal reasons. A life settlement is usually a better alternative to lapsing or the surrender of a life insurance policy. Many people choose to benefit now by selling their life insurance policy for cash and using the proceeds to reduce or eliminate their financial burdens or just enjoy life.
If this sounds like an option for you, MRE Finance offers a FREE online life settlement calculator that can provide you with an estimate value of your life insurance policy within minutes.
If you prefer to speak with a specialist, call MRE Finance at 1-800-521-0770. We believe in transparency, privacy, and professionalism. You can also review our FAQ’s about life settlements at https://mrefinance.com/faqs/.
MRE Finance specializes in helping people with their journey to financial freedom.
About MRE Finance LLC
MRE Finance brings over 25 years of experience in the life and viatical settlement industry. Our mission is to educate and provide information to help seniors and those chronically ill, live life with dignity and greater financial stability by assisting them in selling their life insurance policy. MRE Finance believes in being transparent with its clients and, above all respecting their privacy.