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The idea of retirement means many different things to many different people. For some, it can be boiled down to a goal of saving enough to live modestly throughout the rest of their lives, while others picture lavish vacations and endless days on the golf course. The largest degree of mystery surrounding retirement can be found in how to do it right, regardless of what you may picture the “golden years” looking like for you.
Fortunately, learning how to best approach retiring doesn’t have to be as hard as people often think it to be. Consider the following “dos and don’ts,” each of which can help to clarify your path toward a successful retirement.
DO Consider Investing in Real Estate
It’s not uncommon for people to approach retirement age thinking that they’ve got all their ducks in a row financially, even if they have no assets and bring in a less-than-stellar salary. More often than not, it ends up being too late in the game when people in this category discover they’re not actually prepared to see their retirement through. One way to curb this mistake is to invest in real estate. Purchasing real estate is not unlike putting aside a savings that will most likely appreciate over time—perhaps even significantly. This way, you can always sell or rent a piece of property to generate passive income if need be.
DON’T Accumulate Debt
For some people, the excitement of retiring comes from getting the chance to start a passion-based company or organization. There’s nothing wrong with taking this or a similar approach to one’s latter years, but you need to ensure that your next venture doesn’t affect your ability to live comfortably through retirement age. In other words, you should go to great lengths to avoid accumulating debt, which can come back to haunt you at some point. Whether it be an old debt that’s been following you around for years or the potential to accumulate more with a new venture, do whatever you can to avoid digging deeper holes for yourself.
DO Diversify Your Investments
Chances are you’ve been given the advice of not putting all of your eggs into a single basket at one point or another. While this old adage can translate to many different aspects of life, it’s especially true when it comes to retirement. Picture the scenario of tossing your entire life’s savings into the stock market, only to watch a crash occur weeks later—it’s happened before, and there’s no guaranteeing it won’t happen again. You can get a lot of mileage when it comes to security out of diversifying your investments (think stocks, cash, bonds etc.), which can lead to smoother, less volatile returns over time than taking the “single basket” approach.
DON’T Cash Out Early
When you have a plush retirement account at your access, it can be tempting to pull money out of it for vacations, large purchases or other reasons. In a word, don’t. You’ll not only be eating into a fund you’ve set aside for security later in life, but you may also end up having to pay penalty fees as a result. Your retirement is there for a reason—don’t make the mistake of ending up back where you started.
DO Take Advantage of Your Employer’s Retirement Plan
If you’re still actively working toward retirement, now’s the time to take full advantage of the retirement plan your employer has set up for you. This means maxing out any available 401(k) matching, utilizing direct deposit to put aside money each month and contributing pre-tax dollars to your plan, which will reduce your tax responsibilities to a noticeable extent. The sooner you start down this path, the more prepared you’ll be for retirement.
Just because retirement seems daunting doesn’t mean it has to be. Make the right moves now, and you won’t have to worry about paying for your mistakes later.