Many people view retirement income planning as a strategy that has a final finish line. Once you’re finished with your career and you’ve retired, you might think there is nothing left to plan. It’s true that you have reached a huge milestone, but in reality retirement income planning will last the rest of your life! You’ve just entered a new phase of the process.
Once you enter retirement, take these four steps to keep your finances in order.
Establish a budget. Analyze your annual cost of living, keeping in mind that some expenses do not recur every month. Set a budget for yourself. After you have covered your regular expenses, set aside some money in a savings account for emergencies. You might also consider reinvesting any leftover funds, so that your retirement accounts remain robust.
Account for health care. Let’s keep our fingers crossed that you will enjoy good health throughout your retirement. But since none of us can predict the future, we should all factor in the cost of health care when we plan for retirement. Plan to increase your health care expenditure as you grow older, both because you’re likely to need more care and because the cost of health care is rising. Also, consider purchasing long-term care insurance, because even a short stay in a nursing home could wipe out your retirement income fund.
Have some fun. If you have set a budget and accounted for health care costs, feel free to splurge on yourself just a bit. You’ve earned it! It’s important to enjoy your retirement. If you have retirement goals such as traveling or taking up a new hobby, now is the time to do it.
Meet regularly with your financial professional. You may have jumped an enormous hurdle, but you still have a long future ahead of you. You still need to plan for the future – now more than ever, since you’re likely to be living on a fixed income! Meet regularly with your financial professional to discuss your budget and spending, and to reassess your goals when necessary. A little planning goes a long way toward making sure you won’t outlive your financial resources.