Financial Wellness in Later LifeDr. Jim Collins
It’s never too soon to begin planning for financial security for later life and retirement. In fact, the sooner the better! But financial wellness doesn’t just happen on its own. It takes setting goals, planning, commitment and money.
Less than half of Americans know how much they will need to live comfortably in their later years. Almost a third of older adults currently employed who are offered a 401k plan do not participate in it. Putting money away now is important because the average American will spend at least 20 years in retirement.
What does 20 years of retirement mean for many people? It can be the first time in years for unlimited time to travel or engage in hobbies and leisure activities. Those years can be spent developing new skills and talents, enjoying time with family, friends and grandchildren. Some may opt to only partially retire and continue their life’s passion. Others will volunteer or join new social groups.
The point is to be prepared for all of that time later in life. While good health, being surrounded by loved ones and maintaining drive, purpose and meaning are crucial to life satisfaction, having enough financial resources and not worrying about money are an important piece of the retirement puzzle.
Save, Save, and Save Some More
The most important step in working towards financial wellness for the later years is to start saving when you’re able to. It’s true that most young people don’t have enough money to start really saving until their mid-thirties, the sooner you start saving the better. Make saving money for all that fun time later in your life a top priority.
Figure Out What You’ll Need in Later Life
Everyone has their own idea about quality of life and how much money they will need to live comfortably in their later adult years. Most experts would say that you need to be prepared to live on somewhere between 60% to 90% of your pre-retirement income if you plan to maintain your current standard of living. In other words, retirement can be expensive.
Contribute to Your Employer’s Retirement Plan
If you are fortunate enough to work for a company that offers a good 401k plan, sign up and contribute the most you can. What’s even better, your company may contribute more through automatic deductions, making saving even easier. Over time, compound interest and tax deferrals will work in your favor as you save for your future.
Learn How to Invest in the Market
While the markets will have their ups and downs, investing wisely under the direction of an expert financial advisor can significantly help you meet your later life financial goals. Make sure to diversify and remember the old saying “Never put all your eggs in one basket”. Eventually you will become comfortable adding money to conservative or high-risk markets and watch your money grow.
Keep Your Hands Off Your Retirement Savings
Some people make the mistake of taking a little money out here and there and then over time, they regret it. You will lose principle and interest as well as being taxed or penalized for early withdrawals. It’s a lose-lose situation. If you change jobs, leave your plan in place or roll it over to a plan with your new employer.
Look into Your Social Security Benefits
Social Security benefits can provide up to 40% of income after you retire. Many people may be unaware that they can find out how much they will receive when they retire. The Social Security Administration’s website https://www.ssa.gov/benefits/retirement/estimator.html provides a retirement estimator. You’ll need to provide some information, but it’s worth the time and effort.
Final Thoughts on Financial Wellness in Later Life
Retirement can be a time of financial freedom and quality of life as long as one prepares for it. Some important ingredients in great life satisfaction in later life include good health, someone to love and be loved by, meaning, purpose and financial security. It is never too late to plan for our later years, but starting early can yield optimum results.