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4 Retirement Rules To Live By

4 Retirement Rules to Live By

Whether retirement is right around the corner or decades away, it never hurts to start thinking about the future. Here are a few retirement rules that can make your senior years less stressful and more rewarding. All you need to do is follow them.

1. You need a plan

Going into retirement blindly could mean setting yourself up for disappointment, especially if your savings can’t support your goals. That’s why it’s crucial to sit down and think about what retirement looks like for you. Though you may not have every detail mapped out (especially if retirement is years away), it’s never too early to ask yourself some key questions. Where will you live, for example? Do you see yourself working in some capacity when you’re older? And how will you spend the majority of your free time?

Older couple smiling.
Image source: Getty Images.

Oddly enough, it’s estimated that close to 60% of Americans don’t budget for leisure activities in the course of their retirement planning. But given the amount of downtime you’ll potentially have on your hands, it’s important to think about these things now — while you still have an opportunity to save more money to meet your personal objectives.

2. You’ll need more than Social Security income

Many workers assume that once they retire, their Social Security payments will be enough to cover the bills. But most people can’t live on Social Security alone. In fact, your monthly benefits are only designed to replace roughly 40% of your pre-retirement income. Even if you’re willing to adopt a more frugal lifestyle in retirement, you’ll still most likely need a minimum of 70% of your former income to stay afloat financially. And if you don’t want to cut corners during your senior years, you’ll need considerably more.

In fact, you may be surprised to learn that nearly 50% of senior households wind up spending more money, not less, during their first few years of retirement. Being realistic about what Social Security will and will not cover can help you set a more accurate savings goal to work toward.

3. You need a solid investment mix

For years, retirees have relied on the 4% rule to guide their savings utilization. The rule states that if you begin by withdrawing 4% of your savings during your first year of retirement, and then adjust future withdrawals for inflation, your savings should last a good…

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