How to Financially Prepare for Your Old Age

Time flies, and the young and care-free days pass you by much faster than you might think. In most countries, the retirement ages range from mid-50s to mid-60s. Nonetheless, people in their late 50s are extremely vulnerable to any changes in the economy in general and job market. Being unexpectedly laid off at that age can lead to financial crisis since it is much harder for them to compete and get a job. Hence, to prepare for your own financial safety in your old age is very important, and you should start it as early as possible.

a. Keep track of all your debts

These days it is almost impossible to live a debt-free life. There are all types of debts that you take out at various points in your life such as student loans, mortgages, car loans, medical expenses, etc. Nonetheless, your debt must be proportional to your income, and make sure your income can cover your debt obligations. You should also plan to pay your debt as early as possible, for example, aiming at a 15-year mortgage instead of a 30-year mortgage. By this way, you can pay off all your debts before you are too old.

b. Invest in a retirement fund

In some country, the government provides retired people/ senior citizens with basic income to help them make ends meet. However, not every country can afford to do so, and you are on your own to take care of your own financial need. Consequently, it is vital to have a retirement fund/ saving account to use when you can no longer work. If you work for a company, most of the time, it is part of your benefit package that the company helps you to contribute to your pension. Other than that, there are many other independent investment funds that you can invest in and receive your pension later.

c. Cut down on credit card debts

Unlike student loans or mortgages, credit card debts are detrimental to your financial safety. There is almost no way you can recoup these expenses or turn them into some meaningful investment. Most people are tempted by their credit cards to go on many shopping sprees, which they often regret later. To make the matter worse, many banks and credit card companies design many seductive programs to induce their users to borrow money, only to charge them with exorbitant interest rates. Therefore, you should think twice before buying anything on credit.

d. Have more sources of income

To secure your financial safety, you can consider to have multiple sources of income, especially passive income, to support you in your own age. There are many ways to make passive income that you can try such as online writing, blogging, property renting, loyalty, interests from savings, etc.

e. Live minimally

Minimalism is a great way to reduce excessive spending and increase your saving. Many people are tempted to possess as many things as possible just to find down later on that none of those things can give them long-lasting happiness. In fact, owning more than you can afford only leads to more debts and waste. Hence, clean out your attics, closets, etc., sell all the things that you no longer use to make extra income and move on with your life.

f. Stay healthy

The older you get, the more important you realize your health is. Getting sick is not only very expensive but also prevents you from working to earn more money. Thus, when you are still young, try to live responsibly and practice healthy habits to stay active and healthy. For example, you should quit smoking and drinking, and start to work out more frequently.