Living longer requires better financial health. Everyone wants to live longer lives, but many times they do not take into consideration that a longer life may not be an enjoyable one if you are not well prepared to enter the later stages of life.
There are many things to consider when you begin retirement planning, but the two main concerns of most pre-retirees are physical and financial health. Studies show that both of these are equally important to your happiness.
Living Longer Requires Better Financial Health
While most everyone agrees that physical and mental fitness is critical to living longer, more than two-thirds of Americans consider themselves to be underfunded to meet their retirement goals.
Living Longer Requires Better Financial Health
Studies show that the earlier people start planning for their retirement, the more likely they will be to have accumulated enough wealth to retire comfortably. Currently, individual retirement accounts in the United States have restrictions that state their owner cannot withdraw funds without a penalty until you are 59 and a half years old. Also, if your money is in a traditional IRA account, you will have to claim it as ordinary income on your taxes so withdrawals while still earning an income can bump you into a higher tax bracket. Conversely, a Roth IRA uses funds already taxed, so there are no additional taxes when you withdraw these funds.
Most retirement planners will agree that if your employer offers a retirement fund, especially if they are willing to match your donation to it, you should opt to put at least the maximum match amount in your fund every year. Think about it. If you begin putting just 5% of your annual income towards your retirement in your mid-twenties, and your employer adds 5% once you add compounded interest, you should easily have over half a million dollars saved by the time you are sixty.
Living Longer Requires Better Financial Health
Another critical factor in correctly managing your retirement funds is to plan to go into retirement debt free. That means your home, cars, credit cards, and any lines of credit are paid off in full. Completing this step is essential for financial health. First, it will give you a much clearer picture of what your actual monthly expenditures are. From there, you can add to your budget luxury items such as a new car every three or four years or vacations with family and friends.
Living Longer Requires Better Financial Health
Ultimately, you want to be confident that when you retire, you can continue to live the lifestyle you’ve enjoyed while you were working and saving. A big part of that confidence will come from knowing that you have saved enough money on your own so you will not have to rely on funds from the government. As the baby boomer generation continues to enter retirement, studies show that they are living longer and healthier lives than ever before. Medicaid, Medicare, and Social Security funds could be gone by the time you enter retirement. So if you want to be truly happy and confident in your retirement plan, our suggestion is to start saving as much as you can now and keep saving more each year.
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