As a financial advisor, I’ve helped facilitate hundreds of retirements, and I can honestly say that none of them are the same. Each person enters retirement with a different attitude, set of expectations and money discipline. Regardless of our unique design and inclinations, when it comes to retirement planning, San Antonio retirees should accomplish the following 5 things before making the transition into the next chapter of life.
1. Set a budget
Post-retirement spending doesn’t have to change, but if it stays the same, there could be long-term ramifications. That is why establishing a flexible budget in retirement is the most central piece to your plan. You are moving into a phase in life where earning your way out of financial problems is no longer a solution. You have limited resources and you have to consider that spending too much will result in running out of money.
2. Talk to your spouse about premature death
It’s important that you don’t breeze over this conversation. Consider the life insurance you have today. Discuss any survivorship benefit plans on pensions available. Also, consider the impact of Social Security upon death. The surviving spouse will spend about 80% of current consumption. So, you can count on some spending going to the grave. But, are the rest of the resources enough for the spouse to enjoy life?
3. Establish a renewed investment strategy
Your investment-risk profile doesn’t have to change. You can stay aggressive or you can get more conservative. However, the real issue is that you will have more time to watch and worry about your money. Without the distractions of work, you will be quick to make emotional changes that will have a lasting impact on your retirement. Establish boundaries today either working with an advisor or having someone else hold you accountable to your investment attitude.
4. Carve out a large cash reserve
You will have emergencies. You will have unexpected needs and wants. It’s important that you keep around one year of expenses set aside for the unexpected. This means that, generally, you shouldn’t invest all of your money. Rather, keep a portion available for both the unexpected and to establish a peace of mind. Peace of mind in retirement lowers blood pressure.
5. Confirm health-care details
You will have the option at age 65 to join Medicare. The supplements and various parts will be a personal decision. It is critical that your physicians are a part of whatever various programs you select. Also, make sure you are aware of the out-of-pocket costs. Know that the Medicare premiums vary based on your income, so plan accordingly prior to enrolling.
You have heard me talk before about how I don’t like to use the word “retirement.” I prefer the word “pivot.” You are pivoting in life to another chapter where your wisdom, time and freedom will allow you to make a greater impact. Managing your money appropriately will increase the likelihood that you will accomplish your dreams, not just for you, but for others as well.
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.
