Tips to Help You Enhance Your Retirement Readiness
There’s a lot that goes into planning for retirement. It can feel overwhelming, especially if you happen to be getting a late start. However, it is essential to prepare your finances for life after retirement, especially as you enter your fifties and sixties. By this point, you’ll likely have more clarity on what you want out of this next phase of your life, and you can use the three steps below as a roadmap to get started on making your dream retirement a reality.
First: Why You Need a Personalized Plan for Life After Retirement
The act of planning for life after retirement is important, but it’s critical not to have a cookie-cutter or one-size-fits-all plan. You need a financial roadmap that serves you and your unique needs and incorporates your personal and family values. If you haven’t focused enough on your retirement plan just yet, consider this concerning data from Nationwide. In a nutshell, it suggests that your money is vulnerable in the first ten years of your retirement and that any overspending that occurs in those years is very hard to come back from.
So, how do you protect yourself? You’ll need a savvy plan that suits your vision for life after retirement. It could mean setting up a private pension to help sustain you through your golden years or having the plan to pay for health expenses not covered by Medicare, or maybe it looks like being intentional about your Social Security strategy. Regardless, enjoying a retirement free from financial stress requires forethought.
With that in mind, here are three helpful steps to get you started.
Step 1: Budget Building
Don’t fall into the mindset that having a budget is only useful as you’re working and saving for retirement, or that you don’t need one if you have considerable wealth. All retirees should create a realistic budget for life after retirement to prevent overspending – a mistake that could lead to outliving your nest egg. Determine what your monthly spending will look like, including essentials like paying bills and buying groceries. Next, consider your nonessentials like gym memberships or streaming services. As you’re building your budget, you can also factor in significant one-time expenses, like that cruise you’ve been dreaming of, so you can plan ahead for where those funds will come from. Ideally, your budget will leave you with some wiggle room that allows you to tackle goals like assisting your grandchildren with college expenses or buying a vacation home, too.
Step 3: Considering Your Legacy
If it’s your goal to leave a financial legacy for your children or grandchildren, intentional planning is key. You need to determine not only your goals but also smart strategies to achieve them. For instance, if you want to help each of your five grandchildren purchase their first home, think about the best way to accomplish that. You could set money aside in a trust to be accessed after you pass away, or you might consider gifting them money while you’re still alive. For 2023, you can gift up to $17,000 to a child or grandchild without being taxed, so this may be a good strategy to consider.
One small word of caution: Though it is admirable to want to offer financial assistance to your family members, make sure you aren’t doing so at your own – literal – expense. Gifting too much of your hard-earned savings, especially when life after retirement usually means living on a fixed income, could put your own retirement and healthcare needs at risk as you age.
Step 3: Planning for Aging Parents
A great many people find themselves taking on the role of caregiver for one or more aging parents in retirement, and it’s important to create a plan around this possibility, too. Though it can be a difficult subject to navigate, start by communicating with your parents to make sure you understand their financial situation. Know any streams of income they have so that you can coordinate them with your own income and create a comprehensive plan that takes into account their resources and yours, as well as your joint and individual needs.
Maybe you aren’t in a position of needing to care for aging parents yet but communicating about the future is still critical. Life after retirement isn’t as far away as it seems, and creating a plan together is easier to do while everyone is still in good health anyway. Having such discussions early on can protect your parents from financial mismanagement as they age – and prevent you from having additional financial stress or surprises once you’ve retired.
Do You Need Professional Guidance in Preparing for Life After Retirement?
Regardless of your level of financial knowledge – and people fall all across the spectrum – utilizing a financial advisor is a helpful way to position yourself for a financially secure life after retirement. It may be that you’re a savvy investor and have enjoyed building your personal finance know-how, or you might be on the opposite end of the spectrum and feel overwhelmed by all your planning options. Either way, partnering with a fiduciary financial advisor you trust can be invaluable in creating your dream life after retirement.
At Arbor Capital, we work hard to become a trusted partner in your plans for the future. We offer experience and vision to guide you along the way to accomplish your financial and life goals. If you’d like to schedule a no-obligation conversation about your financial plan, please reach out to us today. We look forward to talking with you!