To fund the new costs of smaller living
While the costs of living do drop, most people will like to maintain the lifestyle that they have become accustomed to during their working years, minus the added costs. In fact, this can be seen as a good idea- maintaining your previous lifestyle- as you will already have an idea as to what you can expect to see in your later years, without having to make substantial changes to what you’re used to. However, if a person does not consider how their life will change in retirement, they run the risk of not having enough money, and running into a critical financial crisis, in the years that they should be most enjoying themselves. One example of this would be falling ill, and thus, a, potentially, very large bill associated with that- one that may run a person into a deep, unaccounted-for financial situation. To add, some beneficial ideas in establishing a strong foundation for retirement early on are discussing scenarios and receiving advice from accredited bankers; investing in promising stocks; purchasing various bonds early on to build interest, as well as not accumulating unnecessary debt during their working years. Most people tend to downsize in retirement, either to a small home or to a retirement facility, and with a paid-off home, the proceeds from the sale of estate will be more than enough to fund the new costs of smaller living- further aiding with maintaining a comfortable lifestyle that you are used to.
To conclude, planning for retirement is costly, complex, and almost never ends. Despite the seemingly daunting task of undertaking such a feat, with the right frame of mind and wise decision making, by the time filing for retirement comes around, the process will be next to seamless. $1.2 million over 30 years doesn’t seem like much to live off of, but if a person is already accustomed to such a lifestyle, then adjusting to the change will not be as difficult. Talking to a trusted and accredited banker about how to properly plan for retirement at an early age-around someone’s mid-20s- will make the strategy much more streamlined. Investing properly will help with monetary costs, and some of those funds will build over the years and have the potential of bringing substantial returns.
Retirement should be some of the best years of a person’s life; with some early, careful thinking, and a lifelong commitment to a strong financial plan, they truly can be.