When you retire, it can be a scary proposition for many. Why? They may not have saved enough during their working years, or they may fear that what they did save will not be sufficient for their retirement needs. And for many these and other factors are legitimate things to worry about and consider. But there are four fairly basic things that you can consider that may mitigate your retirement fears, though they probably will not make them go away totally. And if you decide you need assistance consider finding a Certified Financial Consultant near you. So, what should you consider helping with your retirement worries? Let us take a look.
Do not let yourself get spooked by market volatility
As people get closer to their retirement, they tend to examine their retirement savings accounts a bit more closely than they do while working. And that is normal considering when we are younger than about 50 we are not thinking of our retirement. Why is that? Well, at that point, it is still normally at least ten or more years away, and we are concerned with remodeling the house or finishing paying for our children’s education.
But once we are in our 50’s we tend to start to look at the balances and movement of our retirement accounts a bit more. We are now thinking of what will happen to our accounts risk wise as we get closer to that magical retirement age. But do not let market swings get you all worked up and never consider getting out of the markets due to normal market volatility. After all, it has been studied that if you missed the 15 best days in the market, you would have missed the majority of the gains. Never try to time the markets in other words as that is a recipe to nothing but losses. And in the majority of the times when people do sell trying to time the markets they sell at the lows and not the highs. Another recipe for locking in losses.
So, when it comes to market volatility, stay the course, and remain invested. Yes, the markets will always go up and down, and from time to time we will enter a recession. But even as bad as it was in 2008 the markets came back in fairly well and went on to the new all-time highs we are now seeing. And at some point, history will repeat itself, and the cycle will start over again.
Adjust your risk exposure as you get older
As I allude to earlier, while you are working, you tend to not think in terms of risky investments as much as you do when you approach retirement. But as you do get closer to your golden years you do need to adjust your risk exposure in your retirement accounts. And unlike previous generations that had pensions and Social Security to rely on in retirement Gen X and Millennials will rely more on their investments.
Also, unlike Boomers and those before them, fixed income is not as attractive as it once was, so do not rely heavily on that in retirement as a main source of income. Rather you will rely more on equities to preserve and in many cases grow your principal in your retirement years. Why is that? We are living longer and cannot 100% cash out of equities in retirement and rely only on fixed income as a source of funds that will last as long as we may. After all, if you retire at 62 you could spend three or more decades in retirement meaning what you saved will have to continue to grow.
This means you will need to adjust your portfolio and remain in equities if you hope to have funding for up to three decades in retirement. Here you may wish to seek the assistance of a qualified Certified Financial Consultant or other financial professional.
Watch how you spend
When we retire, many of us have a spending splurge shortly after we enter this phase of our lives. And that is after we entered a saving period after paying off the house, and we have stopped funding our children’s lives. But retirement is new to us, and we want to experience everything that we may have avoided while we were working. And traveling to see new and different things is high on many people’s lists, and then there is always visiting grandchildren and your kids where they may now live.
But as with anything, if you properly plan your spending as you did while you were working, everything should be fine. And like when you were younger, budgeting is the key to success and sustainability. If you need help creating a workable budget seek the help of a professional or you can use a tool I use personally and recommend to many, and that is the financial suite of Excel Spreadsheets from Simple Planning. If you are interested in using these feel free to contact me for more information, and to purchase them go to http://bit.ly/2q7dbjS. If you are a Dave Ramsey fan I offer cash budget envelopes from this site, or you can click here to buy those, http://bit.ly/BudgetEnvelopes.
Try to remain flexible
As Forrest Gump is famous for saying, “Life is like a box of chocolates. You never know what you are gonna get.” And that is more than a famous movie line it is a way of looking at life. During your life, I would guess that more often than not things did not go 100% as you wished or had planned. There are and will always be surprises to face in most situations we face. And our finances are no exception.
Another way to look at this is to remember Murphy’s Law. What can go wrong will go wrong. So, when you approach your finances both before and in retirement be flexible and expect the best, but prepare for the worst.
Retirement can and should be some of the best times of your life. Do not spend all of your time leading to retirement worrying about things but rather prepare for a long and happy retirement with your family and friends. And in retirement, do not let your emotions get the better of you and stay your course and use your financial plan. And as always, if you think you need help seek out a Certified Financial Counselor or other qualified professional.
If you need any assistance or have any questions, feel free to leave a message here or contact me directly. And to join our mailing list, please fill out the form below.
