How to Organize Your Finances for Retirement

Whether retirement is decades away for you or just a few years in the future, you can take steps to better organize your finances. Paying down your debt, planning to downsize assets that you no longer need, and saving are all important elements in preparing for those retirement years.

Debt

Everyone's financial situation is different, but for the most part, if you are heading into retirement, you should try to get rid of any debt. You don't want to spend your hard-earned savings on interest. If you are younger, you can make an effort to pay off any existing debt and avoid owing money going forward. If you are older, you may want to pay off your debt more aggressively. 

A great way to do this is by arranging your debts in order either from smallest to largest, or from highest to lowest interest rate. You would then focus on paying down the first debt while making minimum payments on the others, rolling that amount onto the subsequent debt and doing this until you no longer owe money. If you are still struggling, the strategies below for generating more money by selling assets that you no longer need may also help you pay off any remaining debt.

Downsizing

Many people downsize at or near retirement. If your children are grown, you may no longer need the same size house, or if you've left your job, you may have more freedom to move someplace less expensive. If you needed a professional wardrobe for work, you no longer have to worry about those expenses. You might also be able to sell your life insurance policy. A life settlement may be possible if you have a permanent policy. You can review a guide on the top companies that offer life settlements to help you decide, and the amount you get can be added to your savings.

Savings

You should be saving for retirement throughout your adult life, this is one of the secrets of wealthy and successful people in the world. When you are younger, any money that you put away has the potential to increase a great deal in value. If you take a look at the kinds of returns you can expect over decades, you may decide that tightening your budget is worthwhile. If you are older, the amount you are allowed to contribute each year increases. The best approach is to max out your contributions throughout your working life.

Your Retirement Lifestyle

Knowing the kind of lifestyle that you want to have can help you better plan. For example, you may have spent most of your life in a place with a high cost of living but plan to move to a place with a low cost of living after retirement. You may plan to travel, which can cost a little or a lot depending on what you want to do and where you want to go. You may be planning to go back to school or even start your own business. You may also change your mind over the years about what you want to do, so keep checking in with yourself and make adjustments accordingly.