It’s not uncommon to hear horror stories about retirement gone awry, but this is almost always the result of poor planning. By developing a strong retirement strategy and analyzing your situation, you can ensure you’ll enter retirement with a fair amount of ease. This can make an uncertain situation a little easier to handle.
Pay Off Any Existing Debt
As you grow closer to retirement, you should avoid accumulating any additional debt, focusing on paying off the debt you do owe. This means paying down your mortgage and car loans as much as possible, but it also means eliminating your credit card debt. Debt can be like a weighted ball pulling you down after retirement and you’ll probably drown, unless you develop some method of paying it off. If you can come up with no other means, consider consolidating all of your debt into one loan at a low interest rate.
Work Out a New Budget
Now that you’re retiring, your financial needs and resources are going to be changing. This is a good time to determine how much income you’ll be bringing in each month and what expenses you’ll need to cover. When you were working out your retirement planning needs, your advisor probably told you that you would need to withdraw 4% of your funds for each year of retirement. If this isn’t enough to cover all of your expenses and leave you something left over each week, you may need to examine your expenses and look for ways to reduce them.
Consider a New Living Situation
If you’re still paying on your home, you may want to consider selling, and moving into a smaller place. If this is the home where you raised your family, it may be too big for you now and may eat up your resources from month to month. You might consider selling it and using the money to buy a smaller home. Alternatively, moving into a retirement community may be preferable, if you live alone. You should determine where you’ll be happiest and what type of living situation will be more affordable for you.
Look for Alternate Sources of Income
Ideally, your retirement should be a quiet time of rest, which you have earned through years of hard work and struggle. However, things will go wrong from time to time and you should be prepared for this eventuality. Having an alternative source of income or a plan to cover emergency expenses is important. It can help you recover from an emergency more easily.
When it comes to planning for your retirement, it’s important to think ahead about how you’ll live in a fixed income. By taking a look at your expected income and comparing it to your expenses, you may find ways to reduce what you’ll have to pay out this month. By increasing that buffer, you’ll be better prepared to handle unexpected expenses without having to return full-time to the workforce. This type of planning will help you enjoy your retirement years.