Once people reach middle age, they start getting serious about retirement goals. But what does it really take to build a financially secure future? Is a monthly IRA contribution enough, or is there something else diligent working adults can do to make sure their later lives are comfortable, enjoyable, and worry-free? The good news is that there are plenty of tools to get the job done. A wise first step is planning, which includes estimating future income and making a long-term budget.
If you have debt leftover from law school, refinance it to free up funds for other purposes, like building strong retirement portfolios. Another helpful move is to downsize living space after the kids move out. Finally, rebalance current portfolios so that investments suit your retirement plans. Here’s more information about how to do the right kind of planning, and enough of it, to rest easy as age 65 approaches.
Refinance Law School Debt
Law school is one of the costliest graduate programs, which is why so many thousands of lawyers still owe a balance from years ago. Fortunately, there are numerous ways to deal with education cost dilemma. The most practical approach is to review a complete guide that will help you evaluate whether refinancing law school debt is the way to go. Keep in mind that the process ends with an entirely new loan obligation, often one that comes with more favorable terms and rates. The other obvious advantage is that refinancing can mean reduced monthly payments too.
Make a Long-term Budget
There’s no substitute for making a detailed financial plan and long-term budget. Expect to make a few guesses for amounts. That’s the standard operating procedure for estimated budgets. The exercise is worthwhile because it helps working people clarify their goals, think about career advancement, and get a feel for what needs to be done. Use your current monthly budget as a starting point. Extend the amounts and categories at least five years into the future, adding any new expenses or income sources as necessary. Then, complete the effort by creating annual budgets for ten years.
Rebalance Investment Portfolios
If your portfolio was assembled more than a few years ago and retirement is approaching, consider rebalancing it to remove long-term investments in favor of ones with a shorter timeline, like CDs (certificates of deposit) and money market funds. Those long-horizon stocks and bonds were a great idea when you were 20 or 30, but for those in their 50s and beyond, it’s usually wise to ditch the long-term asset classes in favor of short-term ones. If you’re not sure how to do a thorough rebalance job, consult a licensed financial planner or investment counselor.
Get Ready to Downsize
There’s no rule that says people must wait until after retiring to downsize their living quarters. In fact, the opportune time to sell an unnecessarily large house and move into an efficient condo or another kind of property is whenever you are free to do so. Note that the process is about more than just moving to a smaller home. It can also include selling assets that are no longer needed, like boats, vacation homes, extra vehicles, and more.
Estimate Travel and Special Event Costs
Don’t forget special plans like major vacations, trips to visit relatives overseas, cruises, and similar retiree favorites. These kinds of events can be costly and should be a part of the budgeting process. People often set up designated accounts for cruises and similar excursions and contribute regularly. Most working adults don’t have enough time off to go on a seven-week cruise or explore European capitals for an entire summer. But retirees do, which is why budgeting is so important.