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Planning for Retirement- Where to start? Edelman Financial Services Saving and planning for retirement takes up a significant portion of a person's life. Even after retirement, this process must continue in order to ensure continued financial security and freedom.

 

Although your lifestyle may change when you retire, the fundamentals of personal finance do not. You will still need to prepare a budget, control your expenses and monitor the rate at which you are using up your reserves. If you have the gumption, you should still approach luxuries with the intention of either saving for them or finding other sources of income. The vital thing is to realize that, even if retirement is the end of your working life, it is not the end of your financial life. You still need to keep your books, just like you still need to eat, sleep and dream.

WITHDRAWAL RATE

Assuming that you have diligently saved and invested for your retirement, you will likely find yourself with a large nest egg. The question is, how much money can you take from your nest egg each year without using up the pot before the end of your lifetime? The best advice is to use only what you need, to do what you want. The early years of retirement are generally the most active and expensive as far as travel and hobbies go. These are the years when you are most likely to use up the biggest part of your nest egg. If you dip too deep into your nest egg, however, you may be reducing your income for your later years, in which you are likely to have some costly medical bills on top of your regular, everyday expenses.

LIFESTYLE CHOICES

What you are going to do with yourself and how much it will cost? Retired people tend to be very good at keeping costs under control – that's how they were able to save enough to retire. Keeping up this habit is one of the best ways to ensure a financially stable retirement. At the very least, you will want to keep a record of your expenses to see if your expenditures are more or less than you expected. You should approach luxuries, such as a cruise or a new set of golf clubs, as financial objectives and see if you can find ways to save money for those items by cutting down on a monthly expense or finding another source of financing rather than just dipping into your retirement nest egg. More importantly, you should keep track of whether you are doing the things you want to, rather than the things you wanted to. Some retirees who expected to be traveling the world may find themselves aching for home after their first trip, others who planned on operating a hobby farm catch the travel bug.  Personal growth doesn't stop at 65, so you may find your lifestyle goals changing after retirement and should be prepared to adjust your finances to accommodate such changes. This may mean taking a calculated risk and using a significant chunk of money to earn your scuba diving certificate while you have the legs for it, fully realizing that it may mean giving up something else you had planned for the future.

WHY STOP

Some of the happiest retirees are the ones who never truly retire. In contrast to the idea of leisurely strolls and endless golf games, there is growing number of retirees who choose to work after reaching retirement age. Their retirement allows them to find an emotionally fulfilling job that maybe wasn't an option when they had a family to support. It also allows them to make connections in a widening social circle. Besides helping combat two of the major causes of depression in seniors – isolation and lack of motivation – working after retirement provides a source of income that augments investment income. If you find a job you love and work during your retirement years, the financial aspect of your retirement planning will be much easier.