Making retirement a reality series: Part three
Steps to “buying” a secure retirement.
July 7, 2015 - Author: Jinnifer P. Ortquist, Michigan State University Extension
The previous articles in this series addressed the importance of defining and estimating the cost of your retirement. This article will identify specific steps to help “buy” a secure retirement. Never considered that you will be buying your retirement? While it might sound strange it is exactly what you are doing when you are putting money aside now to pay for the cost of retirement tomorrow.
First, start by writing down each of your goals. Include other family members and don’t leave anything out regardless if you think you cannot afford it or not, because this is your “wish” list.
(Tip: Download the U.S. Department of Labor bulletin, “Savings Fitness: A Guide to Your Money and Your Financial Future” for a Goals and Priorities Worksheet or download the Michigan State University Extension SMART goal worksheet.)
Third, rank your goals by their priority. Remember “needs” are what we need to survive and “wants” are all of the extras. Be sure to make retirement saving a priority regardless of your age!
(Tip: Certain goals you may be able to borrow money for such as a car, college, house, etc. However, keep in mind you cannot borrow money for retirement.)
Next, write down the steps that you need to accomplish each goal. This should include the date for completion, how much it will cost, what is the priority of the goal, how much do you have already saved, and what are you willing to do to achieve the goal (i.e. work extra hours, etc.). Re-evaluate if goals are realistic, make adjustments to priority levels if necessary and move unrealistic goals to your wish list to be reviewed down the road. Use the SMART goal worksheet to assist with this process.
Lastly, calculate your net worth. Basically, your net worth is your assets (the value of what you own) minus your liabilities (what you owe). This allows you to get a snap shot of your financial situation. The goal is to aim for a positive net worth that grows each year. Your net worth can help you pay for goals, assist with retirement and get you through financial crises. It is recommended to calculate your net worth on an annual basis. To learn more about the importance of calculating your net worth visit the following article, Assessing Your Net Worth.
The next article in this series will address, What Women Should Know about Retirement. For a variety of financial resources, including how to assess your financial health visit Michigan State University Extension. In addition, Michigan State University offers money management and homeownership classes. For more information about classes offered in your area visit MI Money Health.
Other articles in this series:
- Making retirement a reality series: Part one
- Making retirement a reality series: Part two
- Making retirement a reality series: Part four