Starting your long-anticipated retirement does not mean your years of savings and budgeting have ended. In fact, financial planning is now more important than ever.
You will still need to pay for health insurance, a home and other daily expenses, in addition to whatever plans and goals you have made for your post-working years. Listing your monthly expenses, which can change drastically once you are no longer working, will help you know how much you will need to live at a comfortable level.
Staying committed to budgeting
While you were working, you budgeted and saved to enjoy your retirement, but now that you are retired it is still important to monitor your income and your spending. The term "fixed-income" comes into play because you will be living off what you have saved, along with unchanging income such as pensions or Social Security, so managing your money effectively is important.
Your budget should reflect your retirement goals if they include traveling, exploring new hobbies or other interests, or moving. You will also need to figure out if you want to leave an inheritance for your loved ones or just enjoy every last cent.
Look to the long term
It is difficult to talk about, but your retirement planning should also include how long you expect to live. Are you healthy? Do you have a family history of longevity? How would your retirement budget change if you lived to be 100 years old? Where do you want to be 10 years post-retirement? Do you have life insurance? How about long-term-care insurance and other insurance to protect yourself? This is also a time to begin estate planning and update your will.
Also, consider whether you want to work at all during your retirement, even if it’s just part-time at a shop or museum. Do you know how working could affect your Social Security or other retirement funds?
A financial planner can help you assess your entire retirement portfolio, including finding ways to earn interest or dividends that can bring you more money in retirement. You will need to figure out how you will pay yourself and distribute funds from your retirement accounts, which can have tax effects if you are under a certain age or did not pay taxes on the money before you saved it.
To find out more about planning for retirement, visit our Retirement Center.