Retirement is a time in life where you finally get to get away from the daily grind and enjoy life to its fullest. That’s not to say you should be overworked and miserable up until the day you retire. But retirement can allow you to pursue hobbies, passions, and adventures you otherwise couldn’t while working full-time.
The only way you can do that, however, is by having enough financial stability to sustain your life until the day you die. This is a bit tricky, since no one knows how long they’ll live.
Not to mention there’s no way of knowing for sure what issues might arise in your later years. The last thing you want to do is run out of money during retirement, especially in your later years when you’re physically incapable of working.
How can you do that? Here are a few things to consider.
Get Serious About Your Budget
Budget is arguably never more important than it is when you reach retirement. There is little room to course correct. You won’t be getting any raises at work down the road. For many, the amount of money they have at retirement is almost all of the money they’ll have for the rest of their days.
Create a budget that you can stick to. Assume you’ll need more than you think you do. Plan on living longer than you expect to.
You really can’t save too much.
Rather than attempting to make more money before heading into retirement, it’s generally easier to lower your cost of living. That might mean moving into a smaller house or selling your main home and moving into a vacation home.
You may get rid of an extra car or have a large sale of all the things you no longer need.
By simplifying your retirement life, you’ll require a lot less to live off of.
Take Care of Yourself
Despite what some might try to tell you, it’s cheaper to be healthy. Especially as you get older. By taking care of your body mentally and physically, you can reduce the chances of expensive medical care down the road.
Plus it will allow you to enjoy retirement more.
Long Term Care Insurance
Speaking of medical costs, they can be one of the major depleters of retirement savings. The last thing you want is to set ahead a sum of money to pass on as an inheritance, only to have it eaten up by medical bills.
One in four people who are 65 will have over $50,000 of out-of-pocket healthcare expenses during remainder of their life. One way to offset this cost is with long term care insurance.
This covers the cost of nursing homes, assisted living, or in-home care.
Before you go and sign up for a policy, there are some downsides. For starters, these policies can be expensive, particularly in your later years. Worse, these policies are “use it or lose it”, which can mean a lot of lost money for those who end up not needing long term care.
Money that could have been put into savings or investment.
There are hybrid policies that can offer more flexibility and may even pay out a portion of remaining amounts when you die. We would recommend meeting with a financial professional before choosing a course of action in this area. The best thing is often to simply build up enough retirement that you won’t need to worry about it.
Part Time / Side Work
Though you retired so you can get away from work, it’s not a bad idea to consider a part-time gig. Some retirees are able to find a side job that pays enough to cover their monthly expenses, allowing them to use their retirement savings on other things.
This certainly makes it easier to stay on budget. Also, you may find yourself bored after going from 40-50 hours of work per week to 0. The right part-time job allows you to make some money and stay social.
For those who have other plans for their newfound freedom than working for someone else, the best solution is passive income. There are many ways you can earn passive income: real estate earnings, company ownership, investments, etc.
At KB&P Partners, we offer services for all your financial needs, including financial planning, investment management, and retirement planning in Springfield, Ohio and beyond. Don’t leave your retirement to wishful thinking.
Contact KB&P today!