You plan for retirement your entire life. You set money away. You invest. You live within your means and downsize when the time comes. So, are you ready for retirement?
It depends.
Even with decades of planning, unexpected events will likely occur during your first year of retirement. But, before the unexpected happens, here are five strategies retirees and those about to retire should implement.
Adjustment period
Even if you have a good retirement plan, there’ll be a time of transition when leaving the labor market means significantly less money coming in and more money going out. And, let’s face it, changing pre-retirement habits can be challenging.
If money from the government and investments are the positives, then spending habits — emphasis on “habits” — are the negatives. And the two must coexist in harmony.
Review your budget before retiring, not after. What and where do you spend your money on? What is your anticipated cash inflow? Which cuts make sense, particularly if they don’t influence your quality of life?
Consider everything from memberships you no longer use to high wireless and phone rates. Such measures help you increase your financial buffer when the time comes.
Having to prioritize costs
Enjoy traveling? It’s a lovely luxury but too costly when you include meals, housing, flights, and frequency of trips. Do you want to remodel your house? These days, interest rates on first and second mortgages are simply through the sky.
Want to stay healthy? Gym memberships and treadmills are expensive, but that expense might be well worth it since it’ll help avoid lengthy hospital stays.
Before you open the bank and start celebrating, consider your “nice to haves” against your “need to haves.” For example, if visiting loved ones you miss comes before a one-week trip to Paris on the priorities list, let your wallet follow your heart.
Having to keep saving
When it comes time to retire, many people toss their savings plan out the window in favor of a cruise ship or a dream home. That’s not the right way to go. Saving provides a buffer and a way to achieve even more goals.
If you used to set away 10% of each paycheque, you might now strive for 10% of each Canadian Pension Plan payout. Even 5% is better than nothing, primarily if invested wisely. Yes, the stock market is down right now, but as billionaire Warren Buffett suggests, it’s also an excellent opportunity to purchase undervalued stocks that cautious investors have excessively punished.
Developing a CPP plan
If you begin receiving CPP at 60, you may miss out on additional cash that you would receive at a later retirement age.
If you begin receiving benefits before 65, you’ll lose 0.6% every month, or 7.2% per year, up to a maximum decrease of 36% for those who begin at 60. Conversely, if you delay claiming your pension after 65, your benefits will grow by 0.7% every month or 8.4% per year. By 70, you’ll have reached the maximum rise of 42%.
Most consultants would advise you to postpone taking CPP for as long as possible to maximize your advantages. To be sure, decreasing debt and coping with health difficulties might make deferral impossible. But otherwise, it’d be ideal.
Do you truly know more than your doctor or lawyer? In the same way, nothing can also replace a competent financial adviser. Yearly visits should be a norm, especially during times of market turbulence.
Your adviser can help you discover spending issues, help you complete items on your bucket list, and plan for the retirement lifestyle of your dreams. Many also specialize in providing a thorough, three-dimensional representation of your situation.
The only catch is that some may impose fees for frequent, needless trades or attempt to offer you financial products you don’t require. Therefore, using an adviser who takes their fiduciary responsibilities seriously is critical, so they’ll always prioritize your best interests.
Putting everything together
It’s reasonable but sometimes disappointing that new retirees feel pressed to fit everything into a do-it-all package. That makes it more challenging to enjoy the moment and adds unnecessary stress to accomplish it, no matter the expense or stress.
No retiree should have to live under such duress. Pacing oneself allows for thankfulness and reduces the likelihood of being spent financially, emotionally, and spiritually before your time.
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Bio:
After spending many years studying information technology, specializing in web development, digital marketing, and search engine optimization (SEO), I enjoy applying my skills and experience in helping others achieve their goals online.
As a marketing specialist at Credkeeper, I help people get the most out of their online reputation. Your prospects perform Internet searches for your name before they buy from you. What they see on the first page of Google outweighs almost all other marketing! What do people currently see when they search your name on the Internet?
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