[Guest Post by Andy Masaki – thanks for contributing your thoughts Andy!]
Young or old, the last thing you want to worry about are unexpected retirement costs and their implication. As your time starts to come to an end and as the days get numbered, you won’t be having the same firm grip that you have on this world right now. Things will start to slip away from you, you will pass the light torch to the ‘new’, start to shiver even in the summer, be dry and wrinkled in the cold blue winter.
That’s when you will feel the strong hunger to revisit your past, mend things that went wrong, and try to live this life anew and fresh, once again!
“O’ great creator of being, grant us one more hour to perform our art and perfect our lives” – Jim Morrison, An American Prayer
We are talking of the retirement days! It’s one of the most important financial aspects of one’s life. And, you can start planning for it at an early age.
This post delves into something deeper than just bluish blemishes of retirement age; the talk of loneliness, joblessness, and decay of time and life. We’re covering a sophisticated subject. It’s none other than planning for retirement to avoid future unexpected retirement costs and financial demise.
Unexpected Retirement Costs
You should remember one thing by heart. When you are young, you have ample time but minimal wealth. Then, once you age, you may have significant wealth but limited time to start over if your wealth suffers degradation! Therefore, gear up my fellow wealth building aspirants, and let’s figure out how you can save your retirement from getting ruined by unexpected expenses and financial mistakes.
Having ample savings and net worth for retirement is the creamiest remedy:
You don’t need to worry about unexpected or emergency expenses, if you have well organized savings sitting in the bank vaults. But for many, probably the case is way different. Most of the people spend recklessly throughout their career, thinking ‘who’s seen tomorrow.’ But once reality sets in, and you get the feeling that you will stay alive for quite a number of years till you fade away, by God’s grace, you get to understand that retirement days will be the hardest to pass.
Really, who has actually seen tomorrow? No one. Hence, it is important to start saving for retirement while you are young. It provides you with ample time for retirement planning. Who knows what tragedy or mishap befalls you, when you are supposed to be relaxing and enjoying sugar free cookies and green tea!
To be precise, saving for retirement works more like investing. You won’t understand today how much your future savings is worth, as now you are fit to survive and have the strength to bring in dollars all hours of the day.
The net worth of your ‘retirement savings amounts’ will start to radiate benefits, when your body and mind won’t support you anymore, and when you are old and tired. That’s when, you will see, the interest you receive from the savings accounts have become your primal source of earning in the retirement days.
Moreover, the earlier you start your retirement investments, the more money you will have in the end to manage unexpected retirement costs.
And, if you are a retired person and you are thinking that you could have saved significantly more when the time was right and you were young, then well yes, you may have missed an opportunity for greater financial security. But, let’s not lose hope!
We can focus on budgeting what we have, instead of crying about what we don’t have.
Early Retirement Planning
Many are doing a real good job with early retirement planning, but you may still have a few more things to consider. These are managing your finances in the present time, channeling the cash outflows, and being prepared for any unexpected expenses.
A well explained and organized budget may help you get the job done:
Budgeting probably plays the leading role in managing personal finances, when you are retired. Unless you are some big time value investor, and own more than 3% share of Apple or Google!
Jokes aside, we all can benefit by budgeting to maintain our money ecosystem. Even a magnate like Warren Buffett keeps a budget in hand and does ethical spending.
Here, you can focus on exactly what a good budget best delivers. It is none other than categorizing expenses to the best level.
In general, your retirement budget worksheet includes all expenses that you have each month. Starting from grocery bills, utility bills, transportation costs to insurance premiums and debt payments. Each and every single expense should find its place in the budget worksheet. You will have to right down the names of all the expenses coming to your mind. Also, write down the dollar amounts each of those expenses covers.
Once you are done with your list, add up everything and determine if the total expense is equal to or less than the total income you have per month.
If it’s more than your income, then try to slash out some expenses. Say, you can reduce your grocery bills, or save on transportation costs, or even start to earn more to tackle expenses.
But, no matter what you do, always be aware of the fact that medical costs in retirement can be significant. If you are otherwise fit and fine, then you are a lucky charm. Enjoy it, for few people actually stay fit and healthy as they grow old.
Now, coming back to the Zero Based Budget Worksheet again. Once you have equaled your total expense to total income, and feel that the expense list is complete, your job is done. All you have to do then is spend money according to the budget. That’s it!
The point in explaining this budgeting system to you is that, you won’t do haphazard spending if you work with this budget.
Hence, if an unexpected expense arises, you are ready to dedicate your attention totally to your big savings accounts and certificate of deposits.
Guest Post by Andy Masaki, a blogger at Penny Less Dad and financial writer associated with OVLG.com. You can also find him fielding queries based on money management topics at various online communities and social media platforms.