You’ve been preparing for retirement for a while now; saving, taking advantage of your company’s matching policy, and being intentional with your investments. You’re financially prepared for this next step, but are you emotionally ready for it?
As surprising as it sounds, what catches new retirees off guard is that they now must spend the money they’ve spent years saving. Money cited a report from research firm Hearts & Wallets that said in 2014, 28% of people age 65 and older with at least $100,000 in savings were pulling less than 1% from their account. To give you some perspective, most financial planners suggest spending about 4%.
This lack of spending is rooted in a fear of mistreating or being irresponsible with their money, and it seems to be holding some retirees back. For those going into retirement and to those already there, what are some things that you can do to make the most of your retirement?
Rule the Money, Don’t Let It Rule You
First, look at your expenses. You’ll need to have a clear understanding of where your money needs to go every month to cover your cost of living, utilities, food, and other miscellaneous costs. For some, pulling directly out of one savings account can make this spending and allocating uncomfortable. For more visible control of how your money is spent, consider breaking up your retirement into different accounts. Have a specific, set dollar number put away in a flexible account like a CD or money market that you can draw from. For other, more long-term investments or costs down the road, take a serious look at doing a stock account.
Still feel like there’s something missing here? Does it still sound a little off? Good. It should.
Nowhere in this suggestion is there any savings approach to fun. Maybe all this talk about money has made that word seem like an impossible notion. We’re here to tell you—if your retirement doesn’t factor in enjoying life in retirement then why are you retiring at all?
Start creating a bucket list. Jot down all the things that you would like to do or places you’d like to go. If the list isn’t prioritized already, rearrange it. Now, start figuring out how you’re going to do it in an affordable and responsible way. Those money markets and CDs we mentioned for your expenses? Create another account. Have that duplicate expense account be a new expense: Your fun fund. Once you have your list and account in place, get out there!
Before you get all your financial ducks in a row, settled into new accounts, or budgeted out, take a look again at all of the assets you’re paying expenses on and the plans you have for the future.
With little to no health benefits being offered to retiring employees by employers, can your new insurance situation cover your insurance needs?
At this point, retirees have some decisions to make. For those paying off their mortgage, perhaps a life insurance policy would be a smart consideration to take care of your loved ones after your passing. Or, what if your future involves travel? Would your policy protect you if you wanted to explore other countries and cities around the globe?
By looking at your current health, savings, and eligibility for some state and federal aid, there can be a lot of information to sift through. And many retirees don’t take the time to really evaluate their needs because they’re just overwhelmed.
Whether you’re about to begin retirement or you’re in the middle of it, Doyle & Ogden is here to help with all your insurance questions and concerns. Our team of highly trained professionals can work with you to find a coverage plan that fits you and your loved one’s needs at an affordable price. If you’d like to explore your options, give our office a call at 616-949-9000 or request a quote online today!