How To Prepare Financially For Your Silver Years

It’s important to enjoy the present but it’s also important to prepare for the future. A lot of the time that involves making educated guesses about what might happen. In the case of aging, however, you can be sure that it will happen literally for as long as you live. This means that it makes sense to prepare financially for your silver years. Here are some tips to help.

Do what you love on a budget

Being prepared for the future can be massively reassuring. At the same time, however, you still need to be able to enjoy life in the now. The obvious solution is to do what you love on a budget you can afford. The less obvious solution is to find ways to monetize doing what you love.

Take travel as an example. There really are ways you can travel the world on a tight budget. You might even have a more authentic experience than a traveler cocooned in a luxury hotel or resort. With commitment, you can take your money-saving to the next level by (legally) earning money from your trip.

What this means in practice depends on where you are going. For example, if you’re traveling in your home country then you can (presumably) work legally. You could therefore time your travels for periods when you know that there will be a need for short-term workers. A typical example of this would be during the tourist season, especially at major events.

Outside your home country, you could try creating content around your travels. If you don’t fancy yourself as a content creator, you could try “digital nomading” in some other area. If you’re not into traveling, then look for ways to turn your passion into a side-hustle or maybe even a full-time job.

Be mindful about debt

The key point to remember about debt is that it has to be repaid with interest. This means that you need to decide whether or not the overall price is worth it. That’s entirely up to you. The key point is to decide actively and mindfully rather than slide into debt without realizing it.

For example, let’s say you get the opportunity to go on the trip of a lifetime. The only way you can pay for it is by using a high-interest credit card. If it really is an opportunity you will always remember, then you may feel entirely justified in going for it.

Now say that your buddies are going on a short break. It’ll be fun but nothing particularly special. You’ll have plenty of other opportunities to do the same things with the same people. Again, the only way you can pay for the trip is by using a high-interest credit card. Is it still worth it? Again, that’s up to you. Just make your decision mindfully. Don’t just slap it on the card.

Even if you don’t need debt to make a purchase, think before you buy. Remember that saving money can stop you from getting into debt. In particular, be very careful about convenience/impulse purchases. These are often small items at low prices and, hence, easy to overlook. Over time, however, the cost of these purchases does add up.

Keep savings in context

If you’ve discussed finance with knowledgeable people, you’ve probably been told (several times) that saving is a good idea. That’s generally true. Cash savings are the oil that keeps your cash flow running smoothly. When life’s minor ups and downs happen, as they always do, cash savings can be used to give your income an extra boost when you need it.

Realistically, however, cash savings will not protect you from the worst life can throw at you. Likewise, they’re unlikely to make your dreams come true. The reason why cash savings won’t protect you against the worst life can throw at you is that it’s hard to save large amounts of money in cash. Remember some bills can get eye-wateringly high (e..g medical and legal bills).

The reason cash savings won’t make your dreams come true is that the returns on them are generally very low. This means that they may not even keep pace with inflation let alone make a decent return. In fact, that’s part of the reason why it’s so difficult to save enough to pay large bills.

For completeness, the returns on cash savings may improve at some point in the future. Even so, it’s hard to see them improving enough to make them viable as your main source of both protection and income.

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Recognize the importance of protection

You have to get through the present (and immediate future) to get to the long-term future. This implies that you need to sort out appropriate protection before you can pursue your dreams. Appropriate protection not only means different things to different people. It can mean different things to the same person at different stages of their life.

There is, however, one reality that applies to everyone. Time is going to pass. That means you are going to get older. As you get older, you may become less able (or willing) to work. You may also need (or just want) a higher level of assistance in your life. In fact, realistically, there is a distinct possibility that you may come to need long-term care

Looking for long-term care insurance while you are still a working adult is a very wise precaution. Remember, the younger and healthier you are when you take out any health-related insurance policy, the more affordable it will be.

Long-term care is a classic example of a situation where it is far better to have insurance and not need it than not have insurance and need it. Insurance can open up all kinds of possibilities for you. These can make a real difference to your standard of living and hence how much you enjoy life.

Be ready to take calculated risks

If you have any sort of disposable income then you can choose between spending it or growing it. Spending it may bring you joy in the present. Growing it, however, can bring you even more joy in the future.

Of course, growing money usually takes some level of work. It also takes some level of nerve. The reality is that you can and should expect failures as well as successes. If, however, you do your research well, your successes should outweigh your failures. This is how you make your returns.

Define your vision of your silver years

When it comes to your silver years, there are three facts you need to keep in mind. Firstly, the income you will need will depend, at least partly, on your lifestyle choices. Secondly, the earlier you start preparing for your silver years, the gentler the financial curve will be. Thirdly, the longer you can keep working, to some extent, the more time you have to build your finances.

If you start by giving yourself a goal, you immediately give yourself something to work towards. That means thinking about how you want to spend your silver years. If you had unlimited funds, what would you do with them? Once you’ve defined your dreams, you can shape them into real-world possibilities.

This, quite bluntly, is where you decide how committed you are to making your wildest dreams happen. It’s fine if you’re not. When you think about it, you may be quite willing to settle for more achievable options which still make you happy. In particular, you may be prepared to create a distinction between your silver years and retirement.

For example, if you’re mainly working to pay off the mortgage, then the moment you achieve that goal, you could change paths. If you know that this is your plan, you could prepare for it to make the transition both as quick and as smooth as possible.

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