You have worked and saved your whole life to retire and sometimes the thought of running out of money can cause a degree of anxiety. There are, however, strategies you can implement to make sure your money will last you for your entire retirement. This may seem overwhelming and difficult but the simple steps below can help you lead a comfortable and stress free retirement.
- Meet Periodically with a Financial Advisor
Similar to going for your physical, a retirement “check-up” is critical to making sure you stay on track. When you were younger, getting away with an annual review might have been okay but it’s advisable when you are getting close to or in retirement that you meet with your financial advisor quarterly, and at the very least semi-annually, as a lot can happen in a year.
This is important so that you and your advisor can make adjustments for any new money coming in or any unexpected expenses you had that will impact your long-term objectives. A simple forecast based on your current savings and expenses can be re-evaluated taking into account any changes.
- Make a budget and stick to it
This one may seem obvious however until you track what you spend, most people have no idea what is going out. This is especially true when you are retired and you have more free time to go out to eat, shop and go on vacation. Having a budget and reviewing it at least monthly, and ideally weekly, can ensure the plan you made with your financial advisor is on track.
Having a budget also does not mean you can’t enjoy your retirement so definitely plan trips, have date night and buy stuff for the grandkids, just make sure it fits within your allotted annual spend. - Spending Money on Family
One of the best parts of being retired is that you can spoiler your grandkids. While this is every grandparents’ right and makes them feel good they also need to make sure they don’t go overboard. Buying gifts for birthdays and the holidays is great however buying gifts all the time may not be the best idea.Another area where this gets a little tricky is paying off your child’s college. While this may be something you feel you are obligated to do, it’s not something that should be done to the detriment of your own retirement. If you have extra money and can afford it, then it’s your right however if you have to take from money you need to live on, that may not be the best solution. There is also the thinking that if your children have some skin in the game, they may work harder and be more appreciative. - Take social security as late as possible
It is natural to want to take social security as soon as you are eligible, after all you did put a good chunk of money into it throughout your career. This, however, may not be the best strategy to maximizing your income. According to the Social Security Administration those born between 1943 and 1954 can increase their monthly payments by 32% if they delay taking social security to age 70 instead of age 66. This would mean that by age 73 you would have broken even and every year after that you will continue to get 32% more benefit. The only time you may want to consider taking social security earlier is if you are not in the best health. - Get a part-time Job
Some of you may be thinking that this one does not belong but the truth is while the thought of doing nothing during retirement sounds great in theory, most people find that in practice it is actually very boring. The first 3 months, 6 months maybe even a year you will enjoy getting up when you want to, relaxing all day, going to see your grandkids, going to the park, whatever you feel like doing. However once that initial excitement of having all this freedom goes away, the thought of doing that for the next 30 years, can be difficult.This is the opportunity to think about what you want to do that would be fun and exciting. This does not have to be a full-time, 40-50 hour work week with all the travel that you dreaded during your working years, this could be a part-time job at a hardware store or maybe a tour guide, something that you have a genuine interest in. If you have a particular skill and some good connections, you could also do some consulting work. This will allow you to make your own schedule and make some extra money. One thing to note, be sure to review with your financial advisor and accountant the impact your job may have on your social security benefits.
In conclusion, being prepared and having an understanding of your situation will make living in retirement far less stressful than it has to be. The key to it all is being honest with yourself with what you can and can’t afford and to continue to review and update your plan with you financial advisor.
About the author: Joseph Scalice is a freelance writer and runs the website www.retireeworkforce.com.