As a city that is known for entertainment and non-stop nightlife, Las Vegas may come off as a place that is meant only for the young, energetic, and boisterous population. But this is not all the city has to offer. Living in Las Vegas actually benefits retirees in many ways.
To start with, the Las Vegas weather is quite friendly to the older generation. During winter, you won't experience heavy snow and freezing temperatures that would have chilled you to the bones and caused you body pain. And if you find the summers to be a little hot, it can be easily solved with a quick getaway to a cooler destination using the city's international airport.
Of course, as an entertainment hub, it will never get boring in Vegas. You will have a lot of options for dining with varied cuisines, watching plays and musicals, or enjoying live performances and sports activities. The communities are also conducive for retirement, as most offer recreational facilities as well as parks and other open spaces.
But these perks come with a price as the cost of living in Las Vegas is about 3% higher than the US average. To ensure that you have a comfortable retirement in the future, you need to make preparations in advance. Here are some steps you can take to get yourself ready for retirement :
1. Visualize
Because quality of life is subjective, the first thing you need to do when preparing for your retirement is picturing how you want it to be. The ideal retirement life differs from person to person, and this determines how much you would need to prepare for financially.
List down your top retirement goals and be as specific as possible. Make sure that your list covers not only the basics like food, health, and shelter, but includes hobbies, entertainment, and other activities you would like to do as well.
2. Set A Budget
Some people think that their living expenses will decrease in their latter years as they would have completed most of their responsibilities such as their children's education and paying off loans. But the reality is, having so much time on your hands would most likely lead you to spend for new things, or do more of the things that you used to like.
Financial advisors recommend allocating 4% of your investment portfolio for your expenses after retirement. This means that the higher your projected expenses are, the bigger your portfolio should be by the time you stop working.
3. Check Your Net Worth
Now that you know how much you would need in the near future, the next step is to check your net worth so you can see your current financial position and determine whether you can support the kind of retirement life that you want. To know your net worth, get your assets properly valuated then deduct all of your liabilities.
Your assets include your house, car, investments, and cash savings, while your liabilities should cover mortgages, loans, debts, and other payable items. If you are not sure how to go about this, get in touch with your financial advisor who can help you with your valuations, or your can use online calculators for a quick overview.
4. Protect Yourself From Inflation
Don't forget to account for inflation when projecting your retirement expenses and corresponding funds. Know that some assets like cars and cash slowly decrease in value every year. This means that if you keep the same assets, they would be worth less by the time you retire.
Other assets, like real estate properties, can be used to hedge against inflation as they tend to increase in value over time. If you are close to retiring age, it may be a good idea to get a reverse mortgage for your property. This allows you to borrow funds by using the equity from your home which you can then use to increase your investment portfolio. Get an estimate for your possible loan amount here: https://reverse.mortgage/calculator
5. Diversify Your Income And Improve Your Net Worth
The thought of increasing your net worth may sound intimidating, but with proper planning, this is actually achievable. Look for other passive sources of income that can supplement your salary if you are a full-time employee, or from your net profits if you are an entrepreneur. If you are a low risk investor, you can consider Treasury bonds or Corporate bonds which historically have given about 5% to 7% returns annually, or around 2% to 4% when adjusted for inflation.
If you are a medium to high risk investor, you may want to look at stocks. However, you need to consider the volatility of the stock market before you venture further. The farther you are from your target retirement age, the bigger asset allocation you can set aside for stocks because you have more years to recover any losses that you may incur during market downturns. You can also afford to wait it out until the stock prices recover.
Lastly, simple lifestyle adjustments and more conscious spending can cut back on your daily expenses. The savings can then be added to your investment portfolio.