Going into retirement and having enough money to not only live comfortably but to be able to do the things you’d always dreamed of while you were working is a delicate balancing act. While you’re still employed, you want to be able to enjoy activities and make the purchases you want, but you still need to set enough aside to prepare for your Golden Years.
There is a way to attain a balance so that you can enjoy your working years while still saving enough for your retirement. Here are some of our tips:
- You need to have a plan. You wouldn’t take a road trip without a map, right? If you have to stop and ask for directions at every turn, you won’t know if you’re being steered in the wrong direction until it’s too late. Just as you need a roadmap for a trip, you need a plan for saving and investing (while still being able to spend now) before you take the leap into retirement. Talk to you accountant or financial advisor about your plans for retirement and ask what you can do now to realize those plans.
- When you are investing in retirement you should be planning to preserve your principal. Many retirees want an income that will sustain them for their lifetime and your investments should take that into account. Being conservative in your investments is likely the best way to go as you near retirement age. The time to take risks is when you’re just starting out.
- Whether you’ve operated with a budget prior to retirement, you should certainly have a budget or some sort of spending plan in place when you do retire. Seeing the amount of money you have in savings or in investments may lead you to frivolous spending now. Work out a budget that calculates any taxes you may have to pay, monthly fixed expenses, medical expenses and/or insurance payments. Once you’ve determined those numbers you can begin planning your budget for “fun” and relaxation in retirement.
- Have a backup plan. Regardless of how well you plan, there may still be items that blindside you and force you to rethink your original plans. Health issues, not receiving as much from investments or having higher than planned for expenses can all throw a curveball into your retirement savings. Having a reserve or an emergency fund may help with this – the reserve is something you hope you won’t have to access, but it provides peace of mind in case you do. A reserve fund could be a piece of property, a home that is paid for or even a collectible that could be sold if necessary, it doesn’t necessarily have to be a cash reserve.
- Have a talk with family members about your plans and even your financial situation so they are aware of your hopes and dreams. Protect yourself from falling for some of the get rich quick schemes that are perpetrated on the elderly. You need to have someone on your side that you can trust to help you with your money and investments if the need arises.
Planning for retirement involves not only your cash and finances, but where you will live out your Golden Years as well. Will you age in place or will you be moving into a retirement community? These are all plans that should be discussed with an accountant and your family prior to your retiring.