Retirement planning needs to be adapted to fit the objectives of the individual. A one-size-fits-all approach is rarely the best technique and certainly not when it comes to planning for one’s future. Today, we will cover some topics that will help direct Generation Xers in beginning to plan for retirement.
With a cohort of fifty million people, Generation X is now living through a reality they have seen their parents experience: being a sandwich generation. They are often caring for both their own children and aging parents, creating multiple financial obligations. With many Gen Xers unsure if they will retire comfortably, working to get ahead in their savings is an ongoing daily effort. Fortunately, Gen Xers still have time to realize their retirement direction and maximize planning.
1. Follow a Disciplined Financial Budget.
Following a monthly budget can help ensure one maintains a healthy ratio of saving and spending. Unfortunately, many individuals in Generation X still struggle with cash flow. In fact, for many Gen Xers, cash management is a top financial concern. While creating a financial plan for retirement is essential, it is only one component. Make sure to follow a realistic budget to support responsible cash management and long-term goals.
Budgeting need not be as daunting a task as we try to make it. One can follow a few simple steps to get started, such as listing income, including normal monthly payments, and considering special or unexpected expenses like gifts, vacations, and estimated repair costs. If this still seems a little overwhelming, check out our Budget Template to help get started. It is important to begin getting into the habit of sticking to a budget now, while working. This enables one to be able to gain the control over finances needed to prosper in retirement. For more budgeting tips, please see our blog on the topic.
2. Pay Down Your Debt.
We all know how carrying large debt can directly affect financial wellness; with the rise of student loans, credit cards, and medical debt, it does not appear that we will see much relief in the future. Unfortunately, Generation X has some of these looming debts that are affecting their ability to retire; some even find themselves with more debt than savings. When an individual has this financial equation, one is nearly guaranteed to keep working through the retirement years. Take the time needed today to create a debt-payments process that will help streamline expenses and free up money to invest in savings. One such technique that has worked for some is the Debt Snowball Method.* With this strategy, individuals start with their smallest debts to create momentum to encourage paying off larger debts.
3. Use Calculators to Project Costs.
Calculating expenses is a regular aspect of adult life. To be retirement ready, one must not only need to calculate what normal living expenses will be, the individual also may need to address what health care might cost. Many of these projections can be difficult to do without the guidance of experienced professionals; however, there are a few projections that can be used to get an idea of what one’s personal retirement situation will look like. Two such tools are the FERS Calculator and the Retirement Budget Calculator. The FERS Calculator can help select retirement dates based on eligibility as well as estimate an individual’s gross retirement pension. Whereas, the Retirement Budget Calculator can help one get a head start on tracking current spending habits and see how those patterns can affect the individual’s bottom line in retirement.