Planning for retirement at an early age is the best way to go for a headache-free retirement. Retirement planning isn’t just saving money in a bank account or in 401K; you have to identify your goals and then figure out how to save and invest to get there. Take a step back and look at the big picture before getting into formulas and calculations. Preparing for old age starts today. Once you identify your retirement goals, you need to put money away in different forms of investment to ensure a secure retirement plan. The amount of money you save and invest will determine the standard of living you can afford when you retire.
The RETIRE Project at Georgia State University has been calculating the required replacement rates for decades. As of 2008, the project estimated that households with earnings of more than $50,000 need about 80 percent of pre-retirement earnings to maintain the same level of consumption.
5 things to consider for peaceful retirement for NRIs (Financially)
Where do you want to retire?
Location is an important factor to consider for retirement. Some NRIs want to retire in India, but you should ask yourself if it’s practical. Make sure your retirement decision will not change. Do you want to stay in your current home, downsize your home, do you want to live in a community, or do you want to live partially in the US and partially in India? The cost of living varies by state and location. Check the cost of living in the city you want to live in the US.
What age you want to retire?
What age you are planning to retire? 55, 60, 65 or some other age?. What kind of income resources you will have to have income at your retirement age? Social Security, 401K accounts, IRA accounts have restrictions on when you can withdraw money for your retirement.
What will be your lifestyle?
Who you are and what you want to do when you retire makes a huge difference in retirement planning and the cost of living. Retirement planning includes how to maintain their current lifestyles in retirement or how to change their current lifestyle to achieve the lifestyle of their dreams. Your involvement in community, charity, donations, gifts, and more will also impact not only your financial planning but also your happiness. Read this article on how others are thinking to understand the perspective.
What do you want to do in retirement?
Provision Living surveyed 2,000 Americans about their dream retirement. Respondents told how they want to spend theirtime during retirement. A few of them don’t need additional money for their plans, but some plan to travel, starting a new business, etc. All this requires more planning and thinking about your future.
Photo credit: Provision Living
Do you have Long Term Care?
According to the U.S. Department of Health and Human Services, 70 percent of people age 65 and older will need long-term care services at some point in their lives. Have you realized that a nursing-home stay costs more than $70,000 a year on average? If paying for that could significantly dent your assets, you may want to think about insurance. Whether you’re caring for a loved one or yourself, plan early to be prepared. Read more on Long Term Care costs and how to cover them.
It is most important to have a solid retirement portfolio to support peaceful retirement.
Learn the various ways of tax-efficient savings and investments and how to plan for peaceful retirement for NRIs.