The idea of budgeting in retirement can be frightening – what if you run out of money? This is a common fear that can be assuaged with a little work. For a short list of how to manage expenses in retirement, continue reading below.
- Save as early and as much as possible.
Preparing for retirement as early as you can is the best way to ensure you are adequately funded while living your Golden Years. While working in your youth, save as much as financially possible for you, and the money invested will ideally grow exponentially by the time you’re about to retire.
- Create a budget and stick to it.
Retirement has finally come, and it’s time to budget. Many experts recommend budgeting for at least 70% of your pre-retirement income, with the assumption that some of your expenses will go away in retirement.[1]To be more precise, you can create a more refined budget on how much you spend each month on groceries, utilities, mortgage payments, and more. Once you’re in retirement, try to stick to your budget and monitor spending.
- Create passive streams of income.
The best way to fund your retirement is passive streams of income. These commonly may include low-involvement investments like bonds, mutual funds, real estate properties, and more. If you’re looking to be more involved, you could invest more in the stock market or look into options trading.
- Consider working into retirement.
While it seems kind of counterintuitive, working into retirement can actually provide you with stimulation and something to pass the time. Whether it’s just taking less hours at your current position, or taking on a new part-time job, retirees can find happiness in continuing to work. And the additional income can help your finances, as well.
- Plan for healthcare based on family medical history.
While having an emergency fund is good at any age, it’s especially important in retirement. Our bodies don’t bounce back as well as they used to, so having money for unforeseen medical expenses is crucial. However, it’s also prudent to consider your family’s medical history when planning ahead. If someone in your family had Alzheimer’s or Dementia, it might be wise to plan for and budget for long-term care in your later years.
- Work with a financial advisor.
Creating your own financial plan for retirement is all good and well, but for a more personalized, professional plan, consider the assistance with a financial advisor who has expertise in maximizing retirement accounts and planning for the unexpected.
The views stated in this blog are not necessarily the opinion of Cetera Advisor Networks, LLC or CWM, LLC, and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
[1] Irby, LaToya. “What is the 70% Rule for Retirement Savings?” Experian, 04 Oct 2023. https://www.experian.com/blogs/ask-experian/what-is-70-percent-rule-for-retirement-savings. Accessed 08 Jul 2024.
