Retiring from an activity or job you’ve done successfully for decades is a great relief. But, not having to do that which you were used to takes a lot of adjusting. Your finances change, and so does your social life.
A Happy Retirement Signs
To enjoy your golden years and to retire when you are tired instead of when you cannot work anymore, you should have saved well for your retirement. There are things you have to plan for or plan around, and this article is all about helping you enjoy your retirement. Keep Reading!
Save as if your spending won’t reduce
Even though you expect your expenses to retire, that’s hardly the truth. Some of your expenses may go up after retiring. You’ll still need cable, a home, food, and electricity, not to mention clothes and everything else everyone needs. So, even though you won’t have to drive to work daily, most of your expenses will still be staring at you. You also have to factor in the cost of the mortgage if you will still be paying off your mortgage. And, even with a paid off mortgage, there are rising property taxes, as well as repairs and maintenance costs.
All these costs and you haven’t even considered the cost of healthcare and leisure. Your health insurance will go up after a certain age because of age-related illnesses and the fact that you may have more medical issues once you retire. As a result, you should think of your retirement as an expensive time where you will spend about 80 percent of what you spend today or even more.
Evaluate the value of your nesting eggs
Even though you have saved up a few million in your retirement account, you should be realistic about how long that money will be there and what you will be able to use the money for. Instead of looking at the money in terms of the whole amount saved, look at it in terms of the annual income you get. Even when you are allowed to withdraw about 4 percent (not standard), you’ll still have to pay taxes. A tax audit early on will help you determine how much money you have and how much you can spend to live comfortably after retiring.
Without looking at these complexities, you might end up working well into the time your body fails you – a sad situation which you won’t face if you save up now.
Wondering where your social security savings come in?
Well, we all think that social security is a great way for us to live comfortably after retirement, right? Wrong! Social Security will only give you about 40 percent of what you used to earn, and that number could be lower than that. Don’t forget that IRA and 401K plans might drive your Social Security savings to the IRS.
Time for a Plan B
Before you retire, identify another source of income that will supplement your income after retiring. Your savings will only take you so far. You need a plan that involves income generation in your golden years. Investing in real estate, or working on a hobby will help you get a little more money as you plan to retire.
What else can you do:
- Start saving more
- Down scale after or before you retire.
- Take advantage of catch-up contributions
- Build your emergency fund