It is important for people to have a stable life after reaching retirement age, and many people dream of being able to retire in affluence, but not many people actually achieve this goal. So how can you live a prosperous life in retirement?
In the United States, for example, many Americans have a post-retirement living arrangement, in which daily expenses such as diet, health care and housing are the main content. How much money do you need to cover basic living expenses in retirement? According to the Elder Index, in 2021, single seniors who own their homes without a mortgage will need $1,873 per month and $2,258 per month for renters. However, this amount of daily expenses is the average in the United States, and the cost of living in different areas varies greatly.
The above data is just that it is possible to have a stable retirement, but to achieve a prosperous retirement, you need to save more. Federal Reserve data cited by Synchrony Bank shows that the median retirement savings for Americans between the ages of 55 and 64 is 13$40,000. The median retirement savings for Americans between the ages of 65 and 74 is 16$40,000. Both figures are well below the minimum amount of $700,000 to $800,000 recommended by many financial advisors.
Even having $800,000 in retirement savings doesn't necessarily mean you're rich, it just means that you have enough money to comfortably retire for 25 to 30 years. According to some surveys, a net worth of at least $2 million is required to be considered rich.
So how do you know if you're going to retire rich? Here are eight signs of a wealthy retirement that Gobankingrates has summarized:
1.Put your savings to work
If you want to live a prosperous retirement, you should start preparing long before you retire. Those who have some amount of wealth in retirement have a common habit, and that is that they always seek the best return on their money, including looking for a savings account with the best interest rate.
2.Already wealthy before retirement
Being rich at the time of retirement is the surest sign of being rich at the time of retirement. A lot depends on income and where you live. In states with a lower cost of living, such as Mississippi and West Virginia, you can be in the top 5% of earners if you earn around $300,000 a year.
But in states with a higher cost of living, such as California, Maryland, Massachusetts, and New Jersey, an annual income of $500,000 or more is required.
But being wealthy before retirement is not a guarantee of living a prosperous life after retirement, and rich people make financial mistakes just like everyone else, and bad investments can quickly drain your money. Once you become wealthy, the best strategy is to reduce the risk that could endanger your wealth.
3.No debt
Wealth is more than just having a bank account with a large sum of money and a bunch of valuable assets, it also requires keeping debt to a minimum. If you're saddled with $12 million in debt, having $10 million in cash and assets won't do you much good.
A surefire sign of retiring affluently is having paid off mortgages, car loans, student loans, and other debts.
4.Surrounded by financially savvy people
The vast majority of people don't have a lot of expertise in the financial field that can make you rich. One sign that you can retire affluently is that you regularly consult with personal financial advisors, tax professionals, experts, investment managers, and other financial experts.
Finance-savvy people always look to successful professionals for advice and guidance.
5.Build retirement savings based on your intended lifestyle
Retiring affluently means different things for different people, but for most people, it means enjoying some of the finer things in life.
Another sign that you will retire affluently is by having built up enough savings to pay for the post-retirement activities you want to enjoy, whether it's traveling around, living abroad, buying a vacation home, joining a country club, or donating to a favorite charity.
6.Have a diversified portfolio
You shouldn't put all your eggs in one basket" The old saying has been going on for a while, but it's still valid today. Having a balanced portfolio means that you diversify your investments across different asset classes, reducing risk and increasing the potential for high returns.
The hallmark of your wealthy retirement is that you have significant balances in your savings accounts, bonds, commons, and other investments.
7.It is no longer necessary to raise adult children
Financial experts advise that if you want to enjoy a wealthy retirement, stop financially supporting your adult children. The goal here is to allocate more of the income to retirement accounts so that you can accumulate significant savings.
8.There is no need to rely on social security
Although millionaires and billionaires are eligible for Social Security retirement benefits after working long enough and making Social Security contributions, this is not the money they rely on.
A sure sign that you will retire affluently is that it has been established that Social Security is not needed to help maintain the lifestyle you want.