Are you ready to retire?
“Debt-free Diva” Dee Dee Sung of The Detroit News recently answered a reader’s question about how to create a budget to prepare for retirement. Here’s part of her answer:
1. Determine your current monthly cash flow needs.
It’s easy to not know where your money is going, but it’s essential in order to determine your future cash flow needs.
For example, if you carry any credit card debt or have other loan payments, what will it take for you to pay off in full those debts in the next three years? Do you intend to be mortgage free? Do you have a current spending plan that itemizes all your monthly obligations?
Creating a budget can be tedious to set up and keep updated but in time it will become a habit. There are a number of money management software programs available that make this process simple.
It’s very important to tell yourself the truth about where your money is really going, and it’s usually the category called “miscellaneous” that can keep you in the fog.
You’ll also need to find out how much income you’ll be generating from your pension, OAS, retirement savings and other sources. It will be best for you to speak with a financial adviser regarding creating a plan that will allow you to enjoy your desired quality of life and, at the same time, tend to the preservation of your capital.
2. Get creative.
Formulate on paper what you want the next phase of your life to look like.
The truth is that you won’t know how much money you’ll need to comfortably live on until you decide what you’ll be doing with your time and what resources will be required.
If you’ve been at the same line of work for many years, undoubtedly you will have created a routine for yourself and perhaps not given much thought as to what you want to explore or what brings you passion. This can be a more challenging step as you’ll have to grab a “green light” attitude and start to dream out of the proverbial box.
Will you go into another line of work and be earning some form of income? Will you travel or perhaps go back to school? Ask yourself what an ideal day would look like for you, and from there, go about crafting the steps you’ll need to take to create such an experience.
Of course, nothing is cast in stone and plans are subject to change but the more clarity you create up front, the more prepared you will be.
Comments
Got something to say?