Advertising
Advertising

A Couple of Awesome Retirement Planning Tools

A Couple of Awesome Retirement Planning Tools

The sooner you begin to plan and save for retirement, the better your chances of being able to live well during your golden years. However, planning and saving for retirement is often easier said than done. While everyone will agree that saving for retirement is the right thing to do, we often put it off.

Many of us do not save for retirement due to the fact that we can’t find room in our budgets to save money. In addition, it’s also common to make the decision not to save for retirement because we place more value on spending our money today rather than years in the future.

Advertising

The final reason why we usually don’t save for retirement is that we don’t have a retirement plan, thus don’t know how much we will need in order to retire. There are a couple awesome (and free) online tools that will help you build a retirement plan. These tools will help you calculate how much you need to save and how much you can afford during retirement by answering two critical retirement questions.

How Much Will I Need to Retire

The first step in the retirement planning process is to determine your annual income needs during retirement. Your post retirement cash flow needs will be heavily contingent on your desired standard of living and “must pay” expenses such as your mortgage, utilities, food and clothing.

Advertising

Once you have estimated your annual expenses during retirement, you should then determine how much you will need to save and invest on an annual basis in order to retire on time. The amount of money that you will have to save on an annual basis will depend on how many years you have until retirement, your expected investment growth rate and inflation over the same period.

After you have gathered your retirement planning information, you can use the Wall Street Journal’s Retirement Planning Tool to calculate how much you will need to retire. This application is one of the most robust free retirement planning tools available online. Not only will you be able to develop your retirement plan, but also perform what-if analysis to help you make better financial decisions.

Advertising

How Much Can I Spend During Retirement

Another common issue when it comes to retirement planning is determining how much of your nest egg you can spend during retirement. This question is usually raised under stress when nearing or getting close to retirement. The amount of money that you will be able to draw from your accounts in your golden years will have a huge impact on your quality of life.

More often than not, calculating your nest egg withdraw rate entails making a few assumptions. Planning factors such as length of retirement, starting portfolio balance and owned asset classes are critical in determining what percent of your funds you can withdraw on an annual basis.

Advertising

If you are planning to use your taxable portfolio for retirement income, Vanguard provides a Retirement Nestegg Calculator that allows you to determine how large your portfolio will need to be at the start of retirement and an estimate of a feasible nest egg withdrawal rate given your retirement expectations.

Despite the fact that Vanguard’s Nestegg Calculator is easy to use, it has a robust simulation function that allows you to determine the probability that you will be able to draw on your nest egg through retirement. You can use this functions to perform what-if analyses by changing the various assumptions and re-running the simulation.

When developing your retirement plan remember that the sooner you start the easier it will be. The most efficient way to answer the most popular retirement planning questions is to use free online retirement planning tools.

More by this author

5 Steps to Automate Your Cash Flow A Couple of Awesome Retirement Planning Tools

Trending in Money

1 How to Nix Your Credit Card Debt in Less Than 3 Years 2 Top 5 Spending Tracker Apps to Manage Your Budget Smart in 2019 3 How to Use Credit Cards While Staying Out of Debt 4 How to Use Debt Snowball to Get out from a Financial Avalanche 5 How Personal Finance Software Helps You Get More Out of Your Money

Read Next

Advertising
Advertising
Advertising

Last Updated on April 3, 2019

How to Nix Your Credit Card Debt in Less Than 3 Years

How to Nix Your Credit Card Debt in Less Than 3 Years

Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

Hint: there are ways that are easier than you think.

1. Consider Consolidating Multiple Credit Cards If Possible

This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

Advertising

Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

2. Try to Pay the Full Balance You Spent Each Month at the Very Least

You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

3. Pay Extra When You Can – Every Small Amount Counts

This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

Advertising

It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

4. Create a Plan on How to Pay Extra

Back to the main point, having this plan is giving you one less thing to think about.

This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

5. Cut out Costs for Services You Do Not Use

If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

Advertising

6. Get Aggressive About It

Consider these points:

Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

7. Reevaluate Your Progress at Set Intervals

Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

Advertising

Finally (and most importantly)…

8. Keep Trying

Do not get discouraged. Pushing it off will make it worse. Just keep trying.

Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

Start Knocking out Your Debt Today

The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

More Resources About Better Money Management

Featured photo credit: Pexels via pexels.com

Read Next