After struggling with my finances for more time than most people realize is possible, I began thinking more seriously about what I could do to make things right. I began working hard to go through and identify challenges that I was faced with, including the fact that I had several kids that cost a lot of money. I began thinking of ways to work on saving cash, and it was really amazing to see how much of a difference something like skipping drinks with dinner and working on finding foods we could make at home could really be. I wanted to start a new website all about creating a more solid financial plan. Check out this blog.
Organize Your Financial Plan In The Decade Before Retirement
Are you ten or fewer years from retirement age? Then now is the time to start organizing your financial plan for that next chapter. How can you get your finances fit and ready? Here are 4 steps to take.
List Retirement Accounts. Start by determining what your total retirement nest egg is. If you have more than one retirement account, try to gather them all under one umbrella — whether it's a single financial services planner or a single brokerage company or even an app. This is also the time to figure out exactly how much Social Security you will receive at various ages and the value of any company pensions or benefits you're in line for.
Create a Net Worth Statement. Most people look at their account balances and their debt separately, but you should understand how these relate to each other. A net worth statement is a list of all your assets — such as bank accounts, cash, vehicles, home values, and collectibles — and a list of all debts. Subtract debts from your assets to know what your net worth is. Listing assets will also help you know what's liquid and what can't be easily converted to cash as the need arises.
Define Priorities. Many people focus on money when it comes to retirement planning, but your goals and interests are a big part of how you should handle the finances. If you want to leave something to your kids, for instance, you won't want to draw down your entire account. If travel is important to you, your existing home might be a valuable asset to tap for money to head out. Talk with your financial planner about how your current plan supports these priorities and what changes you could make to do better.
Design a Timeline. Most retirement activities don't all happen at once. You may qualify for pensions or retirement at work before Social Security kicks in. Or you may want to file for Social Security before you qualify for Medicare insurance. Or you may not want to downsize the family home until all your kids are solidly in their careers. Whatever the different stages, list them on a timeline so you know what money or assets is available at every stage. Use your priority list to add items to your timeline.
Follow these few steps to draw up a financial plan for your retirement. You'll then face this new part of your life with more confidence and direction.