Retirement. The time for it comes to us all, but the question is will we be ready for it? Many of us have that gnawing in our guts that tells us that we are not. So how do we tidy up our money situations and the challenges that come with them? Maybe, you’re one of them. If you find that your pensioner finances are a little messier than you’d like. Take heart. There are simple steps you can take that will put you on the ready for when the big day comes.
Make Sure You’re Organized
It’s nearly impossible to tidy up your finances if you don’t know what’s going on with them. You need to get a system in place that allows you to keep your financial records where you and your spouse can access them.
Keep a record-keeping system for both your paper and digital records. Make sure that the way you organize them is the same in both cases. It’ll be easier to match accounts once you do pay something off. You also want to make sure that you establish a financial routine, including making time to update your financial records regularly and not just at tax time.
Finally, you also need to get rid of stuff that you don’t need. That might mean throwing away tax documents that are older than seven years old (to be on the safe side) or tossing old receipts once you’ve reconciled them for tax purposes. Doing this will make your financial situation more manageable for the long haul.
Get Rid of Your Debt
If you’re still of working age, make getting out of debt before you retire priority one. In his book “The Total Money Makeover,” author and financial planner Dave Ramsey admonishes readers over and over again to pay down their debt. He even goes as far to suggest that people take on second jobs to do that. If you’re still of working age, consider getting a second job to pay off your debt. The money you’ll save will ensure that the money you have in your retirement accounts will fund your life and not your debt.
Pay Down That Mortgage
That’s the advice from the AARP website. Despite being good advice, the site acknowledges that sometimes people may be reluctant to pay down their mortgage for a number of reasons.
First of all, some people worry that they won’t have the money they need in an emergency: They reason that should they have financial challenges, they can borrow against their house to get the cash required.
But really, they actually can put that “extra” money to good use should they actually pay off their homes. Homeowners who go this route can sock away the money that they used to pay on their mortgage. The money they save becomes the money they need should they have an emergency.
Second, by paying down their mortgage, their interest will eventually go down, even if the mortgage loan isn’t totally paid off. This lowers the interest they’ll pay overall. This, in turn, means that they’ll pay less for their homes in the long run. If you’re trying to clean up your cash situation before you retire, do consider paying down your mortgage.
If you want to be ready for the day you retire, you need to make sure that you keep your financial situation is tidy. First, you need to have a system that helps you get your finances in order.
Second, get rid of any extra debt that you have. If you do, you’ll have more money to put toward a 401K or other type of investment vehicle. That means that you end up with more money when you retire.
Finally, consider paying down your mortgage. Aside from the fact that this will allow you to own your home free and clear once you retire, you’ll pay less money in the long run because you’ve paid down the principal on the montage. This step ensures that by extension, you pay less in interest, leaving you