by: Lyle Solomon (guest post)
After years of hard work, you might have set retirement as your ultimate goal to enjoy life. You probably want to go on a lazy vacation to spend time with your grandkids and with your family. But, after you retire, are you confident you have a plan for a good financial future?
Retirement means much more than the end of work life. You need a steady budget plan, a solid investment plan, plenty of savings, and a manageable debt for a stress-free retirement.
Signs that you’re not ready to retire financially
The following signs can help you determine whether or not you are financially secure enough to retire, along with our tips that can help you to have a sound financial life after your retirement.
- Payment issues with existing bills:
If you have problems paying your current bills, retirement will make things worse. To continue with a pleasant financial condition, retirees need about 75% of their income. For example, if you earn $70,000 per year, you must earn $52,500 every year after retirement. It may include pensions, social security, 401(k), IRAs, etc. These sources might not be enough to maintain your lifestyle post-retirement. Social security checks, pensions, and 401(k) withdrawals might be taxable considering your income. If you are 65 or older, you may enroll in Medicare, but there are charges associated with it.
Recurring costs and other expenses may decrease after retirement. Likewise, entertainment and travel may rise. Also, keep in mind the taxes and healthcare expenses you will have to bear.
2. Lack of future planning:
You need to save to maintain or buy new assets post-retirement. Therefore, future planning and saving are required before retirement. Avoid certain expenses before retirement to avoid future financial hardships. If you’re buying expensive assets, it is better to do it before retirement.
3. Absence of social security plan:
Social security may not be your sole source of income, but it is essential. Social security administration provides a tool to determine your estimated benefit each month after retirement. Walters, a certified financial planner, and portfolio manager with Palisades Hudson Financial Group’s Portland, Oregon office, states that you can choose to retire once you have reached the age where social security benefits are at their highest. You can increase your monthly payments by waiting for the full retirement age. Besides, you can add up to your savings with the income generated in these years.
4. Lack of monthly financial plans:
Plan a monthly schedule of when to withdraw social security benefits. Plan monthly budgeting to reduce your unnecessary expenses. Know your monthly recurring payments. Once you are sure that your savings will be enough post-retirement, you can choose to retire. Making a list of your expenses will help you determine your income requirements.
5. Not having a plan to deal with inflation:
Inflation will affect your expenditure as well as savings after retirement. The average lifespan of a human has increased. So, keep a good record of your savings and expenses to avoid getting your savings exhausted soon. Treasury Inflation-Protected Securities (TIPS) will help you keep up with inflation, and it’s very safe as the U.S. government supports them.
6. Lack of long-term planning:
To establish a long-term financial plan, you must first analyze your spending habits. Due to the rise in lifespan, you must establish a long-term portfolio. Your retirement savings can be accessed at a rate of 4% per year for up to 30 years. However, there is still a debate over it. You should budget for the assets you spend each year, considering your portfolio, health, and risk tolerance. These characteristics can be determined with the help of a financial counselor. A financial counselor can assist you in analyzing your need, and also recommend some important financial goals to achieve. After evaluating all the factors and comprehending your needs, you can discuss with your financial advisor what you should do.
7. Not establishing a balanced portfolio:
To keep your portfolio balanced, you should focus on income generation and asset protection. Protecting capital and limiting risks are the most critical aspects of retirement and portfolio management. When the market collapses, diversifying your investments helps keep a portfolio stable and minimize risk.
8. Retirement bothers you:
Having your portfolio ready does not imply that you are ready to leave your work. Before retiring, there may still be a few things to consider. A retired life in an expensive city is difficult when daily expenses are considered. Make a detailed record of your retirement income. It will aid in your understanding of the cash flow.
9. Debt that is out of control:
If you have a lot of debt to pay off, you might want to postpone your retirement for a little longer. It might assist you in paying off the debt before retirement, as you do not want to be encumbered with monthly payments. Remember to include the interest when paying off a loan, as this can throw off your post-retirement financial goals. If required, good payday loan consolidation companies may be able to assist you in repaying your payday loans at a lower interest rate. Likewise, you can opt for credit card consolidation if it is bothering you more.
Another reason you don’t want to retire could be something else. If you genuinely enjoy your job and can’t stand being bored, you might find it difficult to leave. Retirement would be the last thing on your mind in that circumstance. You can continue to work regardless of your age as long as it does not harm your health. Work is the ultimate remedy for an unstable mind. So, retirement is not always required. Instead, you can endeavor to be happy for the rest of your life. However, you need to have a solid financial footing whenever you plan to retire. You’re good to go if you’ve entirely secured your post-retirement future.
by: Lyle Solomon (guest post)
Author’s Bio: Lyle Solomon has extensive legal experience as well as in-depth knowledge and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998, and currently works for the Oak View Law Group in California as a principal attorney.
Disclosure: The material presented includes information and opinions provided by a party not related to Thrivent Advisor Network. The information herein is from sources deemed to be reliable, but its accuracy cannot be guaranteed. The opinions expressed may not necessarily represent those of Thrivent Advisor Network or its affiliates. They are provided solely for information purposes and are not to be construed as solicitations or offers to buy or sell any products, securities or services. They also do not include all fees or expenses that may be incurred by investing in specific products. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. You cannot invest directly in an index. The opinions expressed are subject to change as subsequent conditions vary. Thrivent Advisor Network and its affiliates accept no liability for loss or damage of any kind arising from the use of this information.
Listen to Retirement Revealed on:
Ask Jeremy a Question
Download your retirement planning guide now.
Download our Retirement Guidebook
7 Questions That Could Make or Break Your Retirement