There are tons of articles on the Internet providing various strategies and tips about saving for retirement, and a great many “How-To” headlines: how to save, how to invest, how to plan. While these pieces of advice are very valuable, there's often a big piece missing: how to have a happy and successful retirement once you do get there. Too often we treat retirement as the finish line of a long race, but if we're lucky, retirement is the beginning of a new and exciting chapter of our lives.
Managing your money once you reach retirement can be challenging at times. Though you may have retired, I'm sure your ambitions have not, and it can be difficult balancing those aspirations while managing what is essentially a finite amount of money. Enjoying your newfound free time and ability to pursue diverse interests while also sustaining long-term financial stability can certainly be a challenge.
You've worked hard all your life to achieve a stable retirement and provide for your family. Let's look at a few ways you can make sure that all your hard work pays off.
1. Implement A Budget Ahead of Time
A mistake I encounter often is when people wait until after they have retired to begin dealing with their new financial situation. Often times, they begin addressing expenditures and budgeting only after they realize they are spending too frequently or too much.
This problem can be easily solved. Draw up a budget before you retire. This will give you a much better understanding of the assets available as well as a better overview on just how much you will be able to spend. An article published by MarketWatch recommends the following:
“Look through your current expenses and note what will change when you retire, such as where you'll live, taxes, travel, health care needs, and other things that might affect how you live in retirement.”
There is a good possibility that you will discover gaps between the amount you will be spending and what you have saved. Figuring this out early on will save you a lot of stress down the road and allow you to enter retirement confident in your resources.
2. Resolve Your Debts
Debt can damage the reality of your retirement on several fronts. It can eat away at your hard earned savings, severely limit your budget, and drastically affect your ability to enjoy retirement the way you envisioned. If at all possible, focus on solving your debt issues before you retire. If not, you're putting your long term stability at risk. Jeff Rose, author and CFP, explains in an article for U.S. News that debt in retirement can mean that,
“You can’t live where you want to, travel as often as you would like, or really enjoy your hobbies. The money you would have spent enjoying your preferred retirement activities is going right into someone else’s pocket, as you pay what you owe, plus interest.”
3. Plan for Emergencies
If you're approaching retirement age, you've likely already learned how unpredictable life can be. With a consistent stream of income, these surprises can be addressed and properly dealt with. However, with a fixed budget to conform to, financial surprises in retirement become much more impactful on your bottom line.
Setting aside an emergency fund in retirement is a vital way to prevent any unforeseen events from derailing your finances for the long term. Your emergency fund should be liquid, easily accessible, and ideally contain enough money to last for 6 months at your current standard of living. This will ensure financial security in the case of any unexpected circumstances.
4. Get Out and Do Something
Just because you're retired doesn't mean that your goals have to be, too. While retirement is certainly a time to relax and enjoy the fruits of your labor, I know many retirees who still have dreams they want to achieve or who get restless without a project to work on. The mental benefits of having hobbies and projects during retirement are numerous, but if you can find ways to monetize these new projects, all the better.
Whether you take on a part-time professorship at a local college to pass on your knowledge and experience to students, or take on crafting projects and selling the final product, the supplemental income can help keep your financial stress levels at a minimum. And, as Nancy Collamer writes for Next Avenue, work also provides us with satisfaction that goes beyond money:
“Work provides us with a wide range of social, emotional and personal benefits including intellectual stimulation, social connection and the opportunity to make a difference in the world. And the recognition, praise and accolades we get at work make us feel valued and needed as well.”
If your retirement feels lacking in these areas, then finding a rewarding hobby or part-time volunteering or work opportunity can make a world of difference.
Planning for retirement can be stressful, but having your retirement come up short of your dreams can be just as stressful. I'm confident, however, that through planning correctly and finding ways to stay engaged and productive during retirement, you'll be able to find the same success and happiness in retirement that your professional life held. And If you ever have any concerns, remember that we're a simple phone call away.
How are you ensuring your success after your retire? Join the conversation by tweeting us @Lindsey2Wealth!