5 Steps to Retirement Planning in 2022: An Introduction & How-to Guide
If you’re like most people, the thought of retiring someday seems so far off that it can be easy to dismiss as nothing more than a pipe dream. The truth, however, is that retirement planning begins with your first paycheck, and the earlier you start, the better off you’ll be in the long run. Here are five steps to retirement planning in 2022 if you’re at all serious about making sure your golden years are exactly that—golden.
Step 1: Calculate your retirement income
Look at your income, including any Social Security benefits you could receive, and account for inflation. Calculate your approximate retirement income. Estimate your monthly expenses Add up all of your regular monthly expenses, including food, housing, and health care costs. Calculate how much money you’ll need each month after retirement.
Step 2: Estimate when you’ll retire
It’s not uncommon for people to wait until their early 60s before claiming Social Security, but what if you could retire early? Here’s how you can know when it’s time: Figuring out when you’ll retire is an incredibly personal decision, but there are some good reasons to start planning as soon as possible. If you plan on retiring at age 65, that means your working years will end somewhere between 2031 and 2039 (assuming a full retirement age of 67). This doesn’t mean that you have to stop working at that point—but it does mean that now is a great time to start thinking about your options.
Step 3: Create an action plan
By now, you should have created a realistic plan that outlines how much money you will need to retire. The next step is creating an action plan detailing how you will get there. Knowing exactly what you need and when allows you to create a concrete plan of action. This can be done by breaking down your goal into manageable steps. Once you know what it takes to reach your goal, you can start working on those steps immediately.
Step 4: Adjust your spending as needed
If you aren’t already planning for retirement, you will want to make a list of your monthly spending. Track your spending and adjust it as needed. For example, if you are single and spending $750 per month on rent, eating out at lunch every day, and taking weekend trips regularly, your expenses will likely be drastically different than someone married with three children living in a townhouse.
Step 5: Find ways to add extra income
Getting a second job or starting a side hustle are both effective ways to add extra income. What many people don’t realize is that they can also create additional income by selling stuff they don’t need on sites like eBay and Craigslist. If you want to know how to start making money online, there are lots of different ways to do it—from writing articles to creating videos, graphic design projects, and freelance work. Find out what works best for you by talking with other retirees, checking out how-to blogs, and doing some research.