It’s not unusual for person approaching retirement, and the next phase of their life, to have a lot more questions than they have answers. Questions about what your finances will look like after your employment has stopped, and whether your resources and savings will last you through retirement, are quite normal. In most cases, as you get ready to retire, key decisions and preparations need to be made to make sure that the next few decades of your life can be lived in financial security.
That being said, below are a few Top Tips that will help you to make the decisions necessary today that will help you to avoid problems in retirement tomorrow.
Tip 1: Figure out what your needs are, as well as your wants and wishes. This step is absolutely vital to your plans, as determining the type of lifestyle that you would like to have during retirement is no joke. You should start with your “needs”, including things like your day to day expenses, food, utilities, housing and transportation. Things like travel, vacation and social activities as well as automobiles and recreational vehicles are all “wants”. Gifts that he would like to give to friends, family or charity after you pass count as “wishes” and, if you make a list of all 3 categories and know exactly what you have in them, you’ll have a much better idea of how you need to budget in order to live well in retirement.
Tip 2: Determine how long your personal savings will last based on several criteria. Frankly, this is probably the least fun part of financial planning but it is definitely vital. By looking at your pension payments, Social Security, survivorship benefits and personal savings closely, and then looking at several scenario that could possibly occur, you will have a lot more information to tell you whether or not your savings are sufficient.
Tip 3: Create a withdrawal strategy for your portfolio. The ability to generate income during retirement is one of your biggest concerns right now and you need to definitely create a strategy as to how you will withdraw money from your investments now rather than later. Of course the composition of all portfolios will vary based on the types of asset vehicles that a person uses and the way that they plan to spend their money. Experts will tell you that, if you want regular, predictable income, the best fit for you is probably an annuity contract.
Tip 4: Make sure that you fully understand what your options are with Social Security and Medicare. Frankly, there are many opinions as to how and when a person should start receiving their Social Security income. All of these opinions are based on people being healthy and living long lives but, unfortunately, that’s not always the case. If you really need your social security payments now then receiving them as quickly as possible may be necessary. On the other hand, if you’re in good health you may want to delay payments as long as possible in order to get as much back from Uncle Sam as you can.
Tip 5: Don’t be afraid to ask a professional for help. Frankly, things like setting goals and making plans can be done by the average consumer but, when it comes to making big decisions that have real consequences, consequences that might mean losing thousands of dollars, talking to a financial advisor to make sure that you do things correctly is a great idea.
One final Tip is simply this; start saving for retirement as early as possible. This is far and away the best way to make sure that, when your “golden years” finally arrive, your financial situation is golden as well.