How To Prepare For Your First Year Of Retirement
You’ve thought about it. Planned for it. Dreamed about it. For years.
But even with all the planning and preparation and, yes, celebration, the unexpected can happen when you set out on your retirement journey. But there’s no need to panic–you can have some control over how you retire and how well you retire.
These strategies can help you better manage your retirement days and years, and get more enjoyment out of your long-awaited nonworking lifestyle.
Conduct A Thorough Review Of Your Finances
It’s wise to thoroughly look over your budget before you retire, not after. Ask yourself the following questions:
• What’s your expected cash flow?
• What types of things do you spend money on?
• Which budgetary cuts can you make that won’t dramatically impact your lifestyle?
• Can you cut back on subscriptions and services such as wireless and mobile phones?
Taking a close look at your spending habits can be an eye-opener. By cutting back on nonessentials, you could have more money to add to your savings as well as more cash on hand for those things you enjoy having or doing.
Before you start basking in the glow of retirement, take a look at what you consider to be “nice to haves” versus “need to haves.” Thinking about renovating your home? You’ll need to factor in interest rates on first and second mortgages, which can be exorbitant depending on the economy. Want to hop on a jet to Paris? Sounds magnificent, but a trip like that can cost you plenty when you factor in flights, lodging, and food. Looking to focus more on staying healthy? Gym memberships and home equipment come at a cost that can range from fairly inexpensive to high-priced.
Determining which items, pastimes, hobbies, or interests are of the most important to you can help you better allocate your retirement costs. And you may just find that enjoyment doesn’t have to take a back seat to your necessities.
Saving money shouldn’t end when your working days are over. In fact, by emphasizing saving during your retirement years, you’ll be building a financial buffer that you can count on when unexpected costs occur or dip into when you’re looking to make one of your aspirations a reality.
If you managed to put 10% of each paycheck aside, aim for putting aside the same amount of your pension or Social Security check. If 10% is a bit steep, try setting aside just 5%. The point is that saving as much as you can is a sound strategy whether you’re working or realizing your retirement dreams.
Develop A Social Security Strategy
When to start taking Social Security benefits is a personal choice and one that’s often guided by financial factors as well as individual preference. According to the Social Security Administration (SSA), if you take your Social Security starting at age 62, you’ll miss out on additional funds for which you would be eligible at a later retirement age. If you choose to wait until you reach the age of 66, the SSA calculates that you’d receive $1,000 in benefits instead of $750. In addition, you could receive delayed retirement credits if you wait until full retirement age, which stops when you reach 70 years of age.
Seek Advice From A Financial Professional
Retirement comes with its own unique set of questions, choices, and decisions. A financial adviser can help you identify your financial goals, assist with determining spending priorities, and show you how you can realize the retirement lifestyle for which you planned.
It’s worth noting, however, that some financial professionals can charge frequent fees or attempt to sell you financial products you don’t want or need. It’s best to work with an advisor who takes their fiduciary responsibility seriously, and who makes your financial hopes and goals the priority.