In your parents’ days, everyone’s work lives were quite predictable. They would go to school, find a profession, and probably stick with that until retirement. Almost every person had the same retirement plan in mind: by 50 years old, leave the company they’ve worked with since young adulthood, live off of a traditional 401k or pension plan, and play a lot of golf. Nowadays, however, things are not so straightforward. Your retirement may look drastically different from that of your parents.
Yours Will Be Longer
People have typically retired in their sixties because that is when you can withdraw retirement money without incurring any penalties. Because of this, some people have subscribed to the myth that your sixties are “retiring age.” However, you don’t have to wait until you are sixty years old to retire. By calculating your financial independence, you can know how much longer you need to work to support yourself without income. This could be far earlier than your sixtieth birthday. Additionally, you could even switch to a higher-paying job or work more hours to be able to retire earlier.
You’ll Rely on Different Retirement Plans
Traditionally, people had retirement plans that paid specific amounts or stipends each month. The kind of retirement plans that pay specific monthly amounts are much less common nowadays. There are some benefits to getting your retirement money in larger portions. For example, if you want to make a large purchase towards the beginning of your retirement, you will probably have the funds to do so. However, because you won’t be getting specific monthly amounts, you need to make sure that you are budgeting your retirement money wisely. Even if you are not constrained by a monthly payment, you should still limit yourself to only spending a certain amount each month.
You Might Live Longer
Nowadays, people typically live to be older than their parents do thanks to better healthcare, careers with less manual labor, and other factors. Nevertheless, growing older than your parents increases your chances of getting dementia. With dementia, it is difficult to make wise financial decisions. Therefore, to protect your retirement assets, you should plan early on what you will do with your funds. You can also plan out future care for yourself like paying for an assisted living home.
By knowing how your retirement may differ from your parents’ retirement, you will be able to better plan for your future. Retirement should be a relaxing, freeing, and exciting time. Not having to worry about money during retirement will help make it a more enjoyable time for you.
Check out this article on how to accelerate your path to retirement!