Welcome to the world of adulting! Are you feeling the pressure of taking control of your future? Planning is a crucial element in securing your financial freedom, which should not be taken for granted. As an adult, one should understand the importance of planning ahead. Not taking it seriously can cause major issues in your future, like being broke, living pay check to pay check, no money for emergencies, and no retirement savings. Life stage planning involves managing your finances by prioritising the goals that fit in each stage of life. It’s never too early or too late to take control of your life.
Early adulthood: Building a strong foundation
In this stage of life, it’s crucial to set realistic financial goals. You don’t want to set yourself up for failure by setting goals that aren’t attainable. Start small and work your way up. Having an emergency fund is also key. Retirement may seem like a million years away, but it’s never too early to start planning for it. It may not seem important now, but in the long run, investing early can make a significant impact on your future. Remember, every little bit helps, so don’t be discouraged if you feel like you are not making progress fast enough. Building a strong foundation takes time and effort, but it’s worth it in the end.
Midlife: Balancing priorities
First up, revisiting financial goals. If you have been saving for retirement since early adulthood, it’s important to ensure that you are still on track. Take time to review your investment portfolio and make necessary changes. If you haven’t started saving yet, don’t panic. It’s never too late to begin. Next, saving for children’s education. Higher education costs are skyrocketing, hence it’s important to think about how you are going to pay for your kids’ education. Finally, planning for long-term healthcare. No one wants to think about it, but the reality is that healthcare costs can quickly eat up your retirement savings. Consider purchasing long-term care insurance or setting aside some funds to cover future medical expenses. With a little planning, you’ll be well on your way to living your best midlife.
Pre-retirement: The final stretch
You may have been saving for a while, but now is the time to take a look at your budget and see if there is any room for increasing your contributions. Next up, paying off debts. It’s important to enter retirement with as few financial obligations as possible. Hence, take a look at any outstanding debts, like credit card bills or mortgages, and start making a plan to pay them off before retirement.
Last, plan for downsizing. As you approach retirement, it’s time to start thinking about the size of your home. Do you really need all that extra space? Downsizing can not only cut your housing costs but also significantly boost your retirement savings. Plus, it will make cleaning a lot easier. So, make sure to take care of these three things during the pre-retirement phase and you’ll be on your way to enjoying a stress-free retirement.
Retirement: Enjoying the fruits of your labour
Creating a budget for retirement is crucial to ensure that your hard-earned money lasts you a lifetime. Don’t forget to factor in inflation and any healthcare costs. Prioritising healthcare expenses is also important, especially as age catches up. You want to enjoy your retirement without constantly worrying about medical bills. But retirement is not just about healthcare. After all, you have saved and planned, and now it’s time to pursue your hobbies and interests. Investing in recreational activities, be it travel or something local, can spice up your retirement years. It’s time to enjoy the finer things in life that you put off during your working years. Though it is not advisable to splurge, treating yourself once in a while will uplift your mood. All these steps combined will help ensure that you have a purposeful and enjoyable retirement and that you do not feel like you are all alone. It’s your time now, to keep the grin on for the rest of your life.
(Viral Bhatt is the Founder of Money Mantra — a personal finance solutions firm)