Top Four Questions You Should Be Asking About Your Finances Post Retirement
After years spent deferring income into a retirement account, retiring often feels like the ultimate achievement of a lifelong goal. But retirement actually means a new set of rules to consider. A disability attorney in St. Louis suggests the following questions for retirees to consider:
Total or partial retirement?
Retirement isn’t an all or nothing proposition. Many retirees find satisfaction by continuing to work into the retirement years. That doesn’t mean they’re sticking to the jobs they’ve had throughout their working career, though. Some choose part-time jobs in related industries while others devote time to volunteer work. Regardless, retirees who opt to stay in the workplace have an advantage over those who don’t. Not only does the extra work battle isolation and lack of motivation, but it also helps cushion the investments so they stretch farther. One warning, though: be sure any extra income from a part-time position won’t affect anticipated benefits as some retirement benefits are suspended once the worker earns a predetermined amount each month.
What to do in retirement?
Retirement may promise unlimited time, but it does not promise unlimited resources. To that end, it’s wise to keep a record of expenses during the first several months of retirement to see how much those new hobbies and diversions actually cost. Though retirees tend to be financially disciplined, temptations do arise in the form of travel, a new boat, or an expensive new hobby. Weigh the costs of new opportunities against the balance in the retirement fund.
How much to budget?
The first goal is to build a nest egg to use during retirement. The second goal is to make that nest egg stretch across the rest of a lifetime. Budgeting is key. A good rule of thumb is to take out only as much as is needed to achieve what is wanted. It’s a good idea to plan for a lower rate of return on investments than the actual promised amount just in case the stock market slumps. And if you need to rely on base capital, cash in the fixed-income investments to give stocks time to recover.
Another budgetary topic is often going to include housing and health costs. For some housing is going to be a simple matter with a house paid off. However it may be sensible to downsize and make the nest egg larger with the sale of the house. Depending on health concerns it may also help if you look into retirement communities that will be able to offer assisted living. All of this will be good questions to ask when budgeting.
What about the kids?
The decision to leave money to heirs rests solely with the retiree. The overall purpose of a retirement account is for security during the golden years, so it should be used to meet needs before it is considered as an inheritance. If the goal is to leave as much as possible to heirs, budget accordingly.
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Category: Financial Planning
