Life after retirement can be as rosy as you want it to be with these 13 retirement strategies.
Balance Retirement and Good Living with These 13 Tips
In this article:
- The Importance of Having Retirement Strategies
- Have a Clear Vision
- Secure Your Finances
- Plan for All the Stages of Retirement
- Balance Leisure and Activity
- Integrate “Work” in Some Way
- Focus on Your Health
- Build a Social Network
- Use Life Insurance to Grow or Protect Your Investments
- Talk with the Experts
- Don’t Forget about the Taxes
- Don’t Forget to Consider Inflation
- Diversify Your Investment
- Always Put Money into Your Retirement Accounts
The Importance of Having Retirement Strategies
Here’s why it’s important to have retirement strategies. Retirement and good living can go hand in hand, but unfortunately for some people, life isn’t working out that way.
Some baby boomers, for example, end up without enough money, with little to no retirement savings, or with too many health issues. In other cases, people often struggle with boredom or lack of emotional connections once they retire.
Your retirement does not have to be this way. With the right approach, it can be the stunning third act it deserves to be, especially with these tips.
1. Have a Clear Vision
One of the first things to do in order to achieve a happy balance between retirement and good living is to visualize your future.
What do you want to achieve by the time you retire?
- Are you thinking about getting a part-time job or moving to a retirement community?
- Do you expect to live in assisted living or independent living facilities? What kind of long-term care services might you need?
- Do you want to travel, try new hobbies, spend more time with friends and family, or perhaps do all three?
Too many people rush toward retirement only to realize after their last day of work that they do not have a plan.
2. Secure Your Finances
Social Security has a lot of benefits, but it is often not enough for your retirement spending. You most likely need something to augment your Social Security checks.
For those of retirement age, there is a good chance that they no longer have to worry about a mortgage or college tuition fees. Because of this, the check can be useful in covering other living expenses, such as home repairs and property taxes.
The best way to achieve retirement and good living, however, is to learn to make your pre-retirement income grow. Options for this can include different forms of investments, such as individual retirement accounts (IRAs).
When you have too many options, it can quickly become confusing and overwhelming. A financial planner, particularly one who specializes in retirement, can help you out.
Discuss what you would like your standard of living to be like during retirement, and they can help you plan so you can make sure your retirement accounts provide for those standards.
Ideally, it is best to start this process as soon as possible. However, if you do not start investing until after you are 50—you still have time.
3. Plan for All the Stages of Retirement
Many people actually have different ways of defining retirement age. Some believe it is equal to life expectancy. Others consider themselves early retirees, which means they are already out of the workforce before they even hit 60 years old.
The truth is that retirement is a journey, and it has different stages:
- Pre-Retirement and Planning
- Feeling Free and Easy during the “Honeymoon” Stage of Retirement
- Disenchantment Stage
- Creation of a New Identity that Aligns with Retirement
- Settling into Retirement
- Winding Down and Considering Long-Term Care
Other analysts divide retirement into three, four, or five stages. The point remains regardless of how you break it up: you need to plan for a variety of different experiences, from active early retirement, to old age, and onward to long-term care.
At the beginning of retirement, of course, you will be active. You might travel, explore new hobbies, and reward yourselves for the forty-plus years of hard work you have completed.
However, as you get a bit older, everything slows down, and that will possibly include your expenses. According to research from the Bureau of Labor Statistics, people who are 75 and older spend nearly a quarter less than people who are aged 65 to 74.
Because of this, you may want to plan to have more money at the beginning of your retirement and taper the amount you have closer to the end.
4. Balance Leisure and Activity
Many people look at retirement like it is a long weekend, and they just plan to relax. Without a clear plan, relaxing can become exhausting.
In fact, this is often why people move into the disenchantment stage. They get bored, and they start to realize retirement is not all fun and vacation.
This does not have to happen to you, though. You can truly enjoy your retirement, but you need to take a balanced approach to leisure.
For instance, you may want to watch more movies or catch up on all those TV shows you missed while working, but you also need to sprinkle in some more purposeful, enriching activities. Rather than just filling in your time, think about what is fulfilling.
5. Integrate “Work” in Some Way
Another way to achieve a balance between retirement and good living is to integrate “work” creatively. If your finances are doing great, you may want to volunteer. Alternatively, you can give back to your industry by becoming a mentor for young entrepreneurs or like-minded professionals.
If you need (or want) extra money, you can consider getting a part-time job. For instance, instead of quitting completely at age 67, you can work part-time from the time you are 62 to 72 years old.
You work the same number of hours, but you spread it over a decade instead of doing it in five years.
You can also explore fun ways to turn your favorite hobby into a lucrative job. The most important thing to remember in retirement is that nothing is over.
Just because you aren’t working anymore doesn’t mean you’ve lost your purpose.
6. Focus on Your Health
If there is one thing that can increase your cost of living during your retirement age, it is the cost of health care. People are living longer, which means they have a higher chance of developing chronic diseases. Subsequently, long-term care insurance plans are not getting cheaper.
Staying active safeguards your health. Physical activity helps you retain muscle tone, protects your cardiovascular health, and reduces the likelihood of chronic illness. Staying active also boosts your mood and helps to keep depression and anxiety at bay.
Of course, your body is not the only thing that needs to stay active. You also need to keep your mind working.
Work, volunteering, and new hobbies can all help. If you want something a little less serious, or something smaller on the side, you can also include puzzles or games into your daily routine.
Try to minimize stress by planning ahead for your financial needs, building your nest egg early, and preparing for all the obstacles that might present themselves once you’re retired.
7. Build a Social Network
More studies have shown one of the key secrets to a long life is having meaningful relationships. It is also a good approach to retirement and good living.
Devote some time to building a social network. Join clubs, look for activities at your local library, or find other ways to engage with your community.
You may want to find like-minded people or perhaps plan a move to a retirement destination.
Consider becoming a volunteer tutor at your neighborhood school, working as a babysitter at a local homeless shelter, or finding other avenues to be around people of all ages.
There are limitless ways to have social interaction—all you have to do is look for it.
If you have a family, try to nurture relationships with them. Call your relatives, and if they do not use the phone often, start texting or get on social media.
Ultimately, people who have loving relationships with their friends and family have better health and fewer issues with depression.
8. Use Life Insurance to Grow or Protect Your Investments
Usually, if you’re the head of your household (or consider yourself as one), one of your financial goals is to have life insurance.
This coverage, however, can also be helpful when you decide to quit work and retire. You can use it as one of your retirement strategies to protect your assets.
You can get life insurance up to the value of your estate. This way, if something happens to you, your beneficiaries don’t need to go through the trouble of unfreezing your assets.
Some life insurance policies also invest a portion of your premium, so you can add more funds for your retirement living.
9. Talk to the Experts
Although you don’t need to be a money guru to have retirement strategies, it’s still helpful to have a certified financial planner to help you.
Financial planning can save you time when you’re facing tough financial decisions. For example, once you retire, should you take a lump sum pension or not?
A financial advisor can also guide you on where to invest your money, depending on your goals.
When choosing a financial planner, look for someone who has expertise in retirement planning. If you intend to put your assets in alternative investments, then you need to further narrow down your selection.
10. Don’t Forget about the Taxes
Taxes may be good for the country, but it can hurt your income and investments. Make it part of your retirement planning.
Here are a couple of tax guidelines:
- Unless you have a Roth IRA, you have to pay taxes on your withdrawals for a Traditional IRA.
- The interest you earn from income annuity may be part of your taxable income.
- Income from investments, including dividends, are subject to tax.
- The amount of tax you pay may depend on your tax bracket.
- You pay tax when income exceeds deductions.
- Social Security benefits can still be taxable.
What are income annuities? These refer to a contract between you, who gives regular or one-time payment, and the insurance company, which needs to make regular disbursements. They can be a form of a fixed lifetime income.
11. Don’t Forget to Consider Inflation
Besides taxes, another issue one needs to deal with upon retirement is inflation. This refers to the increase in prices over a period of time, which can decrease your purchasing power.
Inflation can hurt your retirement strategies if you don’t anticipate it. By the time you’re ready to leave the workforce, you realize your savings and income may not be enough to support you for the next decade or so.
How much should you account for inflation when retirement planning? Most use 3%.
In other words, you determine all your possible retirement expenses, multiply the total to 3%, then add the number to your savings and investments.
Keep in mind, however, that needs and wants can differ among individuals. A financial planner can help you come up with the right percentage.
12. Diversify Your Investment
Investing is one of the effective retirement strategies as it allows you to grow your money exponentially. You can take advantage of compounding interest as well, where you earn income from the principal and the interest it earns.
That’s not enough, though. Another of the long-standing investment strategies is to diversify your asset allocation.
Depending on your investment profile or personality, you can consider the following retirement planning strategies:
- Mutual funds for more affordable investments
- Balanced funds for moderate growth
- Stock market for big returns
- Money market for guaranteed income
- Alternative investments such as gold for better stability
You don’t need to have all these as part of your income plan or retirement strategies. Just remember the golden rule: grow your money by reducing the losses and boosting the chances of a profit.
13. Always Put Money into Your Retirement Accounts
If you want to retire early, one of the retirement strategies is to put as much money as you can into your accounts. These can be IRAs or 401(k) plans.
Even if you reach the age for withdrawals, however, you can still continue saving in them. For example, when you reach 50 years old, you can make catch-up contributions as part of your retirement plan strategies.
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There is a lot involved in retirement and good living. Whether you are hoping for early retirement, or plan to work as long as possible, you need enough money to cover your living expenses.
A great way to help with the latter is to start an IRA. To learn more about retirement planning, explore our site or contact us directly.
Make a savvy financial planner a major part of your retirement strategies.
What are your retirement strategies? Share them with us in the comments section below.
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Editor’s Note: This post was originally published on September 28, 2018, and has been updated for quality and relevancy.