Highlights of today’s show:
- Continuing our series on finances and life events
How do your finances change when you are retired?
Practice living on your retirement income while you are still working
There is nothing wrong with still earning an income in retirement
How to avoid having to cut back on lifestyle in retirement
There is an illusion in our country right now when it comes to the subject of retirement. Most of us expect our quality of life to increase in retirement, however in reality that is far from the truth. According to recent research done by the Employee Benefits Research Institute, only 13% said that they’re very confident they will be able to afford a comfortable retirement.
Today we continue our series we started last week titled “Finances and Life” by discussing your finances when you retire. Because most retirees’ income will go down in retirement, it is important to do the following three things before you retire:
- Track your spending-A common fear for most potential retirees is that for the first time in a while, or ever, they will have to be careful how they are spending their money. That is because they are often empty-nesters who are making more money than they ever have right before they retire. Therefore they don’t budget or if they do it is a loose budget. To help get back into doing a budget, I recommend looking back at your spending over at least the past three months and determine where and how much you will have to cut back.
Practice living your retirement lifestyle-Now that you have a spending plan in place, it’s time to test it! It’s one thing to say that you are going to spend your money a certain way, it’s another thing to actually do it. But testing your retirement budget before you actually retire gives you time to make adjustments to your lifestyle before you are forced to. It might also make you decide that you aren’t ready to retire quite yet!
Develop ways to stay active and earn an income-This might sound crazy but just because you are retired doesn’t mean you can’t still earn an income. Now you might not work as hard or as much or earn as much, but it is still good for your brain and soul to remain active in retirement. So think of something that you enjoy or have had an interest in doing and develop ways to earn a side income. That way you will be able to work for the joy, and not just for the money.
We finish up by discussing ways that you can prepare to increase your lifestyle at retirement. They aren’t anything new or special that I haven’t discussed before. Rather it is developing a spending plan with your money, avoiding having to pay others money each month in the form of debt, and consistently saving for the long term. For more information on retirement, please check out the following:
Should you retire?
Do not plan on the government for your retirement
Do the wealthy really need to budget? With guest Brent Pittman
I also have special news for those listeners who have an iPhone. The JW’s Financial Coaching app is now available to download. The app allows you to choose a lesson, view its show notes and listen to the show, all right from your iPhone without having to browse the web.
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You can find prior editions of the podcast at the podcast archive page.