If you’re approaching retirement, you’re getting ready for a major change in your lifestyle. Gone will be the days of your nine to five work life. Instead, you’ll approach each day with a sense of freedom that you’ve never had before. That said, we do still need to maintain a bit of caution as we retire — after all, we don’t have an infinite stream of money saved for retirement. That’s why it’s best to leave a bit extra in your nest egg, and it’s wise to plan for the unplanned. When you expect the unexpected, you won’t be stuck without money in retirement — because wouldn’t running out of money defeat the purpose of retiring in the first place?
So, this begs the question: How can you plan for those unforeseen events that can happen during retirement? How can you prepare yourself, both financially and otherwise, for unexpected events that can throw a wrench in your retirement plan? Well, there’s no one individual piece of wisdom that we can share to ensure that you remain protected as you live out your retirement. That said, we know that you aim to live worry-free during these years of your life, and we know how much peace of mind a bulletproof retirement plan can provide. So let’s discuss a few strategies that you can employ to ensure that your retirement plan is bulletproof, so that you can rest assured your nest egg will continue to provide for you throughout the whole of your retirement.
Plan for a Long, Fruitful Life
Did you know that one out of two retired individuals who are part of a retired couple will reach the age of 90? That means that you can expect 25 years of retirement or more! That may come as a shock to some of us who are preparing for retirement, but that’s the way things are going as modern medicine improves alongside improvements in our quality of life. So, smart financial planning means that you should plan for a long, fruitful life. That means that you’ll need to set aside extra money for those additional years, or you’ll need to create a budget that fits your financial stance as you enter into retirement.
Consider investing in several strategies if you have several years before you retire, so that you can supplement other sources of income (like Social Security). Be sure to diversify your retirement portfolio so that you have more than one nest egg in your basket. Speak with your retirement planner about your desires for retirement, and the best strategy to maintain a comfortable lifestyle even if you live an unexpectedly long life. Our advice is simple on this one: Make sure that you save enough, so that you don’t outlive your retirement funds.
Do you remember when pop used to cost a nickel? Or how about when gas was well under a dollar per gallon? Well, those days are gone, thanks to inflation. Don’t forget that inflation will (more than likely) happen as you age and enter retirement.=. Inflation naturally occurs in the economy. As more and more dollars are printed, the value of the dollar slowly drops. That means that your hard-earned dollars simply won’t be worth as much as the years go by. It’s wise to plan for inflation, and to build a bit of a buffer in your retirement savings, since the products and services that you enjoy today will cost more in the future.
Most models project that inflation will result in a 2 percent average increase in prices (or a 2 percent devaluation of the dollar, depending on how you look at it), in the coming decade. It’s difficult to project inflation rates beyond that timespan, but it’s still wise to assume that inflation will continue over the coming decades — history has shown that inflation rates tend to hover at a few percent.
Build in Some Padding for the Unplanned
Do you remember the time where you backed your car into the principal’s car back in high school and your insurance premiums shot through the roof? Or what about when you broke your wrist while skiing in college — you had to take leave from work, and you had medical expenses to cover. Well, these unexpected expenses don’t stop just because you’re retiring. It’s best to set aside “emergency funds” when the unexpected happens.
Create a Budget
Since you’ll likely be living on a set dollar amount month to month, or at least an amount that is fairly consistent throughout your retirement, it’s best to plan a budget for your expenses throughout your retirement. Ask yourself: How much money do I need to live comfortably throughout my retirement? Assess your day to day costs, and how much money you’ll need to pull from your retirement funds per month. Consider home payments, car payments, your utility bills, the cost of food, clothing costs, the cost of gas for your vehicle, membership and subscription costs, expenses for gifts, and other common costs. Create a budget that’ll give you an accurate portrayal of how much money you’ll be spending during retirement. Again, it’s best to include some cushion in your budget, so round up your expenses a bit, and include a little extra for miscellaneous — as we mentioned you never know when you’ll have an unplanned expense.
Whether you’re decades from your retirement, or you’re approaching retirement right now, it’s best to have a plan in place for the next chapter of your life. If you’re younger, you can plan ahead by investing wisely. Speak with a retirement planner to develop an investment strategy that works for you, your income, your current expenses, and your goals for retirement.
If you’re approaching the age of retirement, it’s time to begin planning your transition and budget. Do your due diligence on Medicaid, Social Security, and the state of your retirement assets. Speak with a retirement advisor to create a transition plan, and to assess the health of your assets and your potential options during retirement.
Retire Right With Protect & Preserve
Here at Protect & Preserve, it’s our goal to ensure that you live a comfortable retirement. We aim to provide you with financial plans that will benefit you financially, while providing plenty of support for you during your retirement years. If you’re ready to get started, reach out to us for a no-obligation consultation. We’d be ecstatic to talk to you about your current retirement position, our retirement plans, and the best course of action for you as you approach your projected retirement age.