How to Retire Without Going Into Debt

The idea of retirement is nothing more than a vague notion for many Americans. The prevailing sentiment is that it' s hard enough to survive financially in the here and now without worrying about a time many years down the road. Little is being done by these multitudes to prepare for their future life. Consequently, when an individual reaches his mid-sixties he is often saddled with high debts and little in the way of savings. This presents a couple of rather unpleasant alternatives. Continue to increase the levels of debt in order to fund a retirement lifestyle that he can not afford or forego retirement and continue to work. Since most people would find neither of these alternatives very palatable the solution is to avoid placing yourself in that situation. Begin preparations now while you still have time. Here are some tips and factors to consider while planning for your retirement.

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• Determine what age you would like to retire. This will effect how much you will need to begin saving on a monthly basis.
• Estimate your life expectancy. Consult a recent chart to estimate how many years your money may need to last. This will be another factor in determining how much you will need in savings.
• Factor in the effects of inflation. It is important to figure out roughly how much money you will need in order to live during your retirement years. Once this is done you can determine the amount of years you have to save. With this information you can calculate how much you will need to save on a monthly basis. However, it important to keep in mind that $1 today will not be equal to $1 twenty years from now. Inflation must be included in the final calculations.
• Monitor your risk tolerance. Many experts recommend investments with more risk when retirement is still many years away. The theory is that these riskier investments offer potentially higher rewards. If the investment takes a sharp dip there is still plenty of time for you to recoup the loss. However, as retirement nears transfer money into more conservative funds. If your investment takes a sharp drop at this point you may not have time left before your retirement to recoup the money.
• Cover the basics. Create a budget, cut back on unnecessary spending, save on a consistent basis, factor in Social Security, and pay off credit cards on a monthly basis.

Although people may never be quite as prepared for retirement as they would like one thing is certain; you will never regret beginning your retirement preparations well in advance. In fact, the earlier the better. This almost always will place you in a stronger financial position when your retirement rolls around.

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.