As the cost of living increases in the United States, many Americans are worried about their future retirement. Advances in medicine have increased life expectancy and have pushed back the retirement age for many. Do not get discouraged about your retirement because there are many online resources that can help you to prepare effectively for your retirement. Even if you are starting later in your life, you can stop worrying and start planning for your retirement. You might be surprised how easy it can be to estimate your future retirement expenses and to subsequently make a plan to save the required amount to be comfortable during your retirement. This article will outline five important steps to prepare for your retirement and will list sources that will help you gain access to some amazing online retirement preparation resources.


1. Let Time Be On Your Side

Although you might be tired of hearing it, the earlier that you start to save for your retirement, the more easily you will reach your retirement saving goals. Not only does saving for longer increase your retirement funds, saving early will also help you to take advantage of significant investment growth that occurs more effectively over a long period of time. Some are even utilizing reverse mortgages as a part of their retirement strategy.

One of the greatest ways to be able to save more for your retirement is to decrease your spending. Start by spending less than you earn and use the resulting extra funds to decrease your credit card balances. Prioritize paying off your highest interest rate debt before other expenses. You will save yourself anywhere from hundreds to thousands of dollars in debt payments. As you free up more and more financial resources, you will be able to set aside more for your retirement. As you cultivate the habit of living within your means and continually saving money, your retirement fund will quickly increase.

Many investment companies have dedicated retirement accounts based on your age that will provide you with the best expected return for your investment over time. The idea behind the investment strategy is to invest more of your funds when you are young in higher risk, higher reward investments because these provide greater gains in the long run. As you become older and closer to retirement, your funds are transferred to investments that have a lower risk while providing enough return to keep up with inflation. Review your current retirement investments with a qualified financial planner to make sure that you are balancing the correct level of risk and reward to prepare for your retirement.


2. Take Advantage of Employer-Supported Retirement Programs

Getting free money towards your retirement should be one of your highest priorities while you are working. Many companies offer a match of a certain percentage of contributions that you make towards your retirement. It is important to take full advantage of these extra funds to increase your retirement accounts. An example of this type of employer-sponsored retirement account is a 401k account. Your employer might match up to five percent of your contribution per month. That means that if five percent of your monthly income is $200 and you set this aside in your retirement account, your employer is going to give you an additional $200 in your account for your future retirement. Although it can be a challenge to live without a few extra luxuries, it is a great idea to put at least as much as your employer will match in your account monthly. Additionally, these accounts are mostly tax-sheltered, which means that you will not pay taxes on this income until you use it when you retire. This means that you will lower your taxable income early in your life and prepare to support yourself later in your life.

Although they are becoming more and more rare, some companies offer a pension plan. A pension plan requires that you invest a portion of your pay to be able to receive a fixed income from this plan when you retire. These plans are quite attractive because they can in some cases offer you a significant percentage of your income for the rest of your life after you retire. Similar to a pension plan, most employers are required to deduct part of your wages to pay into United States Social Security. What you might not know is that your employer, unless you are a contractor, pays half of your Social Security deduction. Although Social Security continues to be an important tool in the retirement of many Americans, it is important to recognize that rising costs required to support the program may cause benefits to be decreased in the future. Take advantage of the online Social Security retirement planner to estimate your retirement benefits and find your retirement age. Because you might not get all the money that you put into Social Security back, save for retirement in diverse ways so that you can have multiple sources of cash flow during your retirement.


3. Plan For and Take Advantage of Medicare Insurance

As you get older, you might begin to require more healthcare support. Make sure that you take advantage of the available federal programs to help support your healthcare. You are eligible to enroll in Medicare at age 65. There are multiple programs in which you can enroll to get the full benefits of Medicare. Medicare Part A provides basic medical insurance but does not cover all deductibles, co-payments and long-term care. If you want to pay a little more per month and get additional benefits from Medicare, you can enroll in Medicare Part B and C. These help to cover outpatient care and allow for alternative coverage. Enrolling in Medicare Part D can help you get discounts on your prescription drugs.

Take time now to research your current healthcare insurance and see how it is affected by Medicare coverage. If your employer offers continued coverage after you retire, compare the coverage and costs to those of Medicare insurance. You might find that your current plan or Medicare might be a better option for your future.


4. Carefully Plan For Where You Will Live When You Retire

Your retirement residence can vary in cost depending on your individual situation. It is best to save as much as possible to help cover any potential fork in the road during your retirement. You want to start by paying off your mortgage while you are still working. Attempting to pay off a home loan during retirement will reduce your retirement cash flow. If you are on a tight budget, you may consider moving into a more affordable home during your retirement. Otherwise, a reverse mortgage is an option that does not require a monthly principal and interest payment.
If you or your family has a history of significant health issues later in life, you might be one of the 40 percent of the current 65-year-old Americans who will spend some of their retirement in a nursing home. Nursing home care can easily exceed $300 per day. Because Medicare and the vast majority of insurances will not cover this level of care, you need to make sure that you have sufficient resources to cover these costs during your retirement.


5. Characterize And Plan For Your Future Expenses

When you estimate your future expenses during retirement while you are still planning and preparing for retirement, you will be able to know what resources you will need in order to comfortably retire. Some people mistakenly think that their Social Security and savings will be enough to cover all the future expenses because expenses like housing will be lower after a home is paid off. Indeed, some expenses will be lower during retirement, but others will be greater. The United States Department of Labor outlines that you should figure that you need 80 to 90 percent of your pre-retirement income in order to cover your retirement expenses.

Take time to estimate your projected retirement expenses in a spreadsheet program. There are multiple sites online that list common retirement expenses. Included in your list should be your food, clothing, housing, utilities, insurance, transportation, taxes, recreation and travel. The Department of Labor has estimated that the yearly inflation rate for the past 20 years has been 2.5 percent. After you have a list of your projected expenses, multiply the total by the estimated inflation, and consider the amount of savings that you will need to support your expenses throughout your retirement. In addition, it is critical to build in a monetary “cushion” that will keep you comfortable if expenses increase for unexpected reasons.


With a Plan, You Do Not Need To Worry

Instead of thinking of preparing for your retirement as a sprint, think of it as a marathon. Your careful plan with consistent savings will help you be comfortable during your retirement.