I was offered this guest post by seasoned retirement planner Louis Mack. Since we’re working on our retirement plans for next year, I thought I’d share!
It’s never too early to start planning for retirement, but it can become too late to retire with a sustainable setup. The average person will procrastinate looking into retirement, making other tasks a priority, until 65 has come well into view.
The sooner you start putting money away for retirement, the better off you will be. A good rule of thumb to follow is to have 1.5 times your annual salary saved for retirement between the ages of 35 and 45, 3 times between the ages of 45 to 55, and 6 times your annual salary after 55.
Regardless of when you start, there are a number of tasks you should and will need to do before you can kick your feet back and enter retirement.
Everyone strives to be debt free but it is especially important to try and accomplish this so you aren’t stressed during your golden years.
Credit cards- Credit card rates are higher than the returns so pay them off as soon as possible so to avoid dealing with the unpleasant consequences of accumulated interest.
Mortgage- By paying off your mortgage before you retire, you will cut your expenses a significant amount but establish a home-equity line of credit beforehand so that your credit will have tax-deductible interest. As far as refinancing a mortgage or getting a HELOC, it is much easier to do when you still have a salary.
Eliminate car payments or any other large amenities that must be paid off.