Preparing for Retirement? Here’s a Free Cheat Sheet

By Tom Burchnell
retirement cheat sheet

Need a retirement cheat sheet? If you’re like most Americans, you probably think about retirement pretty often — but you may not have done all the retirement planning you need to get you there. Studies show that close to 60 percent of Americans haven’t even calculated how much money they’ll need in retirement. An estimated 30 percent of people who have access to an employer-sponsored retirement plan aren’t participating in it.

That’s understandable, of course. Most people face a lot of stress and uncertainty in their daily lives. With an ever-changing job market and an economy in flux, it’s hard for many people to sit down and plan for retirement. Besides, figuring out the best path to financial freedom can be overwhelming. That’s why we took the time to create this cheat sheet containing everything you need to know about preparing for the retirement of your dreams. Keep reading for our retirement cheat sheet, and to learn what steps you can take today to get yourself financially ready for the future.

Step 1: Build a Realistic Budget

Very often, people are unrealistic about how much money they are going to need once they retire. Many people anticipate that they’ll be able to live on a small budget once they leave work. They think they will be comfortable paring down their expenses so that they get by on just 75 percent of what they spend today. And they budget accordingly in their retirement planning.

Unfortunately, that may not be realistic at all. In reality, most people face fairly high expenses after they retire. Their mortgage may not be fully paid off, meaning that they still have a monthly drain on their income. Their children may still need some financial assistance, especially if they have young families of their own, or if they want to complete their higher education. Besides, many retirees like to go on tours, vacation, and enjoy restaurants more often, as a way to celebrate their newfound free time. All of that costs money.

That’s why when you plan your retirement using this cheat sheet, your first step needs to be creating a realistic and honest budget for your future. Speak to your spouse about what kind of life you’ll be living, and figure out how much it’s going to cost you. It’s always a good idea to be well-prepared for the real future.

Step 2: Calculate Your Timing

When you’re preparing for retirement using this cheat sheet, it’s important to consider the timeline in front of you. When do you expect to retire? The timeline on your retirement plans will make a big difference in terms of how much investment risk you should be taking on.

If you’re still young, then you can incorporate a decent amount of risk in your retirement portfolio. That’s because even the most volatile investments usually even out over time. If, however, you’re expecting to leave work in the next decade or so, you’ll want to focus your investment on secure stocks and bonds. A sudden downturn in your investment could spell serious trouble for you if you are leaving the workforce soon because your portfolio won’t have the time to recover before you need to start tapping into your funds.

Step 3: Build Up Your Savings 

Investing is important, but so is building up a sizable savings. If you’re already saving part of your income every month, that’s great. Continue setting a certain sum aside on a regular basis, and look for ways that you can increase your nest egg. Sit down with your spouse and make a list of all the things that your family spends money on in a typical month. Then, figure out areas where you can cut your spending.

If you’re not already saving, this is a good time to get started. For many people, saving money can be a stressful project. It’s easy to feel discouraged and overwhelmed. However, remember that even small savings can add up considerably over time. Once you get yourself in the habit of saving your money, you’ll be surprised at how quickly your nest egg grows.

Try to think of saving money as paying your future self. Instead of viewing it as a deprivation, think of it as a way to ensure your own comfort and peace of mind in the future. Some families even find ways to have fun penny-pinching! Look for low-cost or free entertainment options, and consider cooking special meals at home instead of going out to dinner. There are countless ways that you can build up your retirement savings while still living your life to the fullest today.

Step 4: Invest in Your Company’s Retirement Plan

Many companies offer their employees the opportunity to invest in a company-sponsored 401K plan. Typically, companies offer matching funds whenever their employees pay into a retirement fund. The exact terms will depend on the company, of course. Your firm might match half of what you pay into your retirement fund, or they may match the full amount. No matter what the details are, it’s a great idea to take part in a matching fund — after all, when you take part in this system, your employer is paying for a sizable portion of your retirement.

Some workers are reluctant to invest in a company 401K plan because they aren’t certain whether they’re going to stay with the same company for the foreseeable future. After all, today’s economy is more uncertain than ever before, and many people work at a number of different companies before retiring. However, 401K funds can be easily transferred when you leave your current employer.

If your company does not offer a 401K plan — or if you are self-employed — you can also create your own 401K plan. You can invest up to $6,000 every year with an Individual Retirement Account, or IRA. You can also start an IRA with much less upfront, so don’t hesitate, even if you’re operating on a very small budget.

Step 5: Think Outside the Box With a Sale-Leaseback for Retirement

A sale-leaseback program is a great way for retirees to convert the equity in their homes to cash without leaving their homes. It can also be the perfect option for people who are retiring in the near future and have not yet decided where they want to go after they leave the workforce. You sell your home and stay as a renter with the option to eventually buy your home back or move out. 

Key Takeaways

If you’re preparing for retirement using this cheat sheet, there are several steps you should take to help set yourself up for financial success. Talk to a financial advisor to make sure you’re checking all the boxes necessary and exploring all of the options available to you.

Tom Burchnell
Written by Tom Burchnell
Director of Product Marketing

This article is published for educational and informational purposes only. This article is not offered as advice and should not be relied on as such. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process. EasyKnock is not a debt collector, a collection agency, nor a credit counseling service company.