My husband and I aren't waiting until the last minute to map out our retirement plan. We have our ideal retirement scenario in mind as well as a backup retirement plan. After we each turned 40, we realized it was time to make all of our important financial situations with our eventual retirement in mind. We don't always put our retirement first, but we count the cost before breaking open our retirement nest egg to pay for college or other expenses. Preparing for retirement, for us, is not just about having $1 million saved in a 401(k) plan.
1.) Cutting our housing costs
The main ways we can cut our housing costs in retirement is by either living with our children or living in our paid-off home. We decided to go for owning our home outright. Our goal is to pay off our mortgage in less than 10 years from now. We want to be in our early to mid-50s when our home is paid off so that we can spend another 10 years upgrading and renovating our retirement home. Our plan is to retire in place.
2.) Saving at least 10 percent
My husband and I could save a lot more for retirement, but we made a commitment to at least save 10 percent for retirement. In our 30s, our personal contributions to our retirement plans fluctuated. We took a break from saving for retirement so we could save for a home purchase. In our 40s, we have a lot of college expenses. However, we continue to have at least 10 percent deducted from our paychecks and invested in 401(k) plans. We have always made sure we received the company match when offered.
3.) Waiting to collect Social Security
We are not making the assumption that we will be able to work until we are each 70 years old. At the same time, we can decide to delay collecting Social Security for as long as possible. A lot of the senior citizens we know took early retirement at age 62. They are now broke and struggling to pay for basic necessities. According to a recent article by Huff/Post50, the full retirement age for people born after 1960 is 67. If we start taking Social Security at 62, we will get a benefit that is 30 percent smaller.
4.) Investing in dividend-paying stocks
I recently heard an expert say that investing in dividend-paying stocks is like expecting to be paid now as well as in the future. Dividends offer an immediate gratification for investors, but they can also work for people who practice delayed gratification. We are reinvesting our dividends within our Roth IRA accounts set up through discount brokerage firms. When we retire, our plan is to use the dividends to supplement our retirement income. In the meantime, we are accumulating more shares of individual stocks by taking the $50 or $100 dividends to buy additional whole and fractional shares.
Our Plan A is to week working until we reach maximum retirement age, but we will still be fine if we become ill or lose our jobs. Our Plan B is to live in our paid-off home and use dividends to make up any retirement shortfall that is a result of being forced to retire early or a shortfall in the Social Security fund.
1.) Cutting our housing costs
The main ways we can cut our housing costs in retirement is by either living with our children or living in our paid-off home. We decided to go for owning our home outright. Our goal is to pay off our mortgage in less than 10 years from now. We want to be in our early to mid-50s when our home is paid off so that we can spend another 10 years upgrading and renovating our retirement home. Our plan is to retire in place.
2.) Saving at least 10 percent
My husband and I could save a lot more for retirement, but we made a commitment to at least save 10 percent for retirement. In our 30s, our personal contributions to our retirement plans fluctuated. We took a break from saving for retirement so we could save for a home purchase. In our 40s, we have a lot of college expenses. However, we continue to have at least 10 percent deducted from our paychecks and invested in 401(k) plans. We have always made sure we received the company match when offered.
3.) Waiting to collect Social Security
We are not making the assumption that we will be able to work until we are each 70 years old. At the same time, we can decide to delay collecting Social Security for as long as possible. A lot of the senior citizens we know took early retirement at age 62. They are now broke and struggling to pay for basic necessities. According to a recent article by Huff/Post50, the full retirement age for people born after 1960 is 67. If we start taking Social Security at 62, we will get a benefit that is 30 percent smaller.
4.) Investing in dividend-paying stocks
I recently heard an expert say that investing in dividend-paying stocks is like expecting to be paid now as well as in the future. Dividends offer an immediate gratification for investors, but they can also work for people who practice delayed gratification. We are reinvesting our dividends within our Roth IRA accounts set up through discount brokerage firms. When we retire, our plan is to use the dividends to supplement our retirement income. In the meantime, we are accumulating more shares of individual stocks by taking the $50 or $100 dividends to buy additional whole and fractional shares.
Our Plan A is to week working until we reach maximum retirement age, but we will still be fine if we become ill or lose our jobs. Our Plan B is to live in our paid-off home and use dividends to make up any retirement shortfall that is a result of being forced to retire early or a shortfall in the Social Security fund.
