Preparing for a comfortable retirement depends on several factors, including age, income and lifestyle. While there isn’t a one-size-fits-all answer for how to comfortably retire, there are general rules of thumb that can help you save for retirement and make sure the money saved lasts throughout your retirement years.
Here are nine steps you can take now to begin preparing for a comfortable, happy retirement.
Create a Financial Plan With a Financial Advisor
If you don’t know how much you need to save for retirement or aren’t sure what your vision for retirement is supposed to look like, it’s never too late (or early) to meet with a financial advisor and create a financial plan together.
“A financial plan can map out your retirement goals, plug in what you’ve saved for retirement so far, track how those retirement funds may grow in the future and let you know if you need to save more to reach your goals,” said Lorrie Delk Walker, financial advisor at Allen & Company of Florida.
Get Out of Debt
If you have any outstanding debt, like a mortgage or credit cards, pay off the balance in full as soon as possible.
“The interest you pay each month likely outpaces the growth on your investments right now, so you’re going backward if you have debt,” said Delk Walker.
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Keep Savings in Money Market Accounts
John Campbell, central region managing director for U.S. Bank Private Wealth Management, recommends keeping three to five years of savings in cash or a short-term vehicle like CDs or money market accounts.
Invest in Bonds
“During your first few years of retirement, you may want to think about Treasury-issued securities that are not subject to interest-rate swings like Series I Savings Bonds and Treasury Inflation Protected Securities (TIPS),” said Campbell.
Create Tax-Diversified Sources of Income
Tax-diversified sources of income for individuals planning a comfortable retirement should include a mix of pre-tax and post-tax vehicles. Think traditional 401(k) and/or IRA accounts, along with a Roth 401(k) and/or a Roth IRA, to avoid paying extra taxes when you take distributions.
Additionally, if you are currently employed and your employer offers a retirement plan Delk Walker recommends contributing to this retirement plan to the point of maximizing any company match. Set a goal to increase your contribution annually until you max it out.
Open an HSA
Do you have a health savings account (HSA)? Campbell said a HSA can now be used as a retirement account. An HSA uses pre-tax dollars, so you can take the account with you if you leave your job and it will grow tax-free.
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Protect and Preserve Your Assets
One of the single greatest expenses in retirement is healthcare. Most Americans need to work to at least age 65 when they qualify for Medicare. While part of your vision for a comfortable retirement should focus on the care and keeping of your health, an unexpected healthcare bill has the ability to take a significant portion of a retiree’s income or savings. In some cases, this can lead to retirees selling off their assets to make up for the financial loss.
Rather than sell your belongings, Campbell recommends thinking about obtaining a long-term care policy, a hybrid policy or permanent life insurance as a funding vehicle. (If you are thinking about long-term care insurance, Delk Walker said to talk to a professional about its merits before deciding if it’s right for you.)
“Many policies allow for after-tax contributions, and you can add a long-term care rider. These policies pay a death benefit, but the cash value belongs to you, and some policies earn interest or dividends on a tax-deferred basis,” said Campbell.
There is good news for those who decide to delay retirement. In the event a retiree chooses to delay their retirement until age 70, they will receive the maximum payment available and coverage under health insurance.
Read Books About Retirement
Delk Walker recommends retirees read a copy of “How to Retire the Cheapskate Way” by Jeff Yeager. By reading books on retirement, retirees will be able to open their eyes to other retirement scenarios and possibilities.
“Often, financial experts identify a specific amount of money needed to retire. I’ve heard $1 million and $2.3 million. But the truth is, retirement looks different for everyone and you may opt to make some lifestyle changes that enable you to live more cheaply and retire earlier,” said Walker.
Get Creative With Reducing Expenses
If you have already paid off any outstanding debt, now is the time to see where else you can cut back on expenses. Can you negotiate a cheaper monthly phone statement? Cut the cord on subscription services? Make the most out of couponing? Are there certain bills you can pay yearly instead of monthly?
“Think of creative ways to reduce your expenses, such as increasing your deductible on homeowners and auto insurance, as well as other expense-reduction measures,” said Campbell. “As the old saying goes, adjusted for inflation, a dollar saved is a dollar earned.”
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This article originally appeared on GOBankingRates.com: I Want To Retire Comfortably: 9 Steps To Take Right Now To Get There