Workers are often encouraged to save for retirement so they can avoid major financial stress later in life. In fact, if you don't make any effort to save for retirement, you might really struggle to do things like pay rent or put food on the table once your career comes to an end.
But while it's one thing to save enough for retirement to cover your basic expenses, it's another thing to save in a manner that allows you to spend money making your days better. And if you want to enjoy retirement to the fullest, you may want to set yourself up with extra income.
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Staying busy could be your ticket to happiness
One problem retirees tend to encounter is boredom. It's hard to go from working on a full-time basis to suddenly having loads of downtime.
Not surprisingly, data from MassMutual finds that retirees who are happier in retirement are more likely to be filling their free time with different activities. These include spending time with loved ones, exercising, pursuing hobbies, and traveling.
But some of these things cost money. Sure, you may not have to spend money to visit your grandkids across town (other than maybe spring for an ice cream cone or two), and it's more than possible to exercise for free -- that's what walking trails are for.
But some of your hobbies might cost money, and a lot of it. If you love theater, you may be eligible for discounted tickets as a senior -- but you might still spend $50 or more for a couple of hours of entertainment. And travel can be a very costly thing to do in retirement, especially if you're talking about doing so overseas.
That's why it's really important to save extra for retirement. You don't just want to enter your senior years with enough money to put gas in your car and pay your monthly bills. You also, ideally, want to have some money left over so you can spend your days enjoying life rather than sitting around bored.
Start early for strong results
The idea of building any sort of retirement nest egg might seem daunting. But the more money you're able to sock away, the more fulfilling your senior years are likely to be.
To that end, aim to start funding a retirement plan from a young age. If you're able to set aside $300 a month in an IRA or 401(k) starting at age 25, by age 65, you'll have about $932,000 if your investments if that account generates an average annual 8% return.
That's a touch below the stock market's average return, so it's not an unreasonable assumption. And a $932,000 nest egg could leave you with the extra income you need to stay as busy as you want to be.
To be clear, it's more than possible to wind up happy in retirement even if you don't have much savings to your name. But the more income you have at your disposal, the more options you have for making the most of your newfound free time.
