Key Elements You Need To Know About Financial Planning Before And After Retirement
Senior finances is a hot topic. Thanks to advances in medicine and better living conditions of modern society, people are living longer. Of course, the downside to living longer is that more money is needed. The conundrum that living longer causes in relation to financial freedom and retirement planning has been addressed by innumerable experts. While some are professional experts, others are scam artists trying to build their nest egg off the back of pre-retirees and retirees.
There are some key elements about financial planning before and after retirement that are recommended by most professional experts:
Keep in mind that if you aren’t planning on working after you’ve retired from your primary career, then your income will be fixed. There won’t be anymore overtime, bonuses, holiday pay, commissions, or raises to supplement your income. Make sure that you’ve planned well and eliminated major sources of debt prior to retirement. Your home and credit card debt should be completely paid-off before retiring. In the event you still have a considerable mortgage remaining, you might consider downsizing or taking out a mortgage with a longer term to lessen the payments. Don’t charge more than you can entirely payoff each month if you continue to use credit cards.
Have A Realistic Budget
There’s a serious problem if you’ve retired and find yourself going over budget each month or drawing on principle. There’s also a problem if you’re a pre-retiree whose expected fixed income isn’t congruent with expected expenses. You need to be realistic and decide how to get your spending under control so that you can live within your fixed income.
Save, Save, and Save
Most experts recommend saving at every opportunity. This may mean that you need to change your lifestyle and make sacrifices to be financially secure during your retirement years. Cutbacks can be made in ways that you don’t feel like a huge sacrifice is being made. For example, if you eat out four times a month, then try only eating out twice a month. Those already retired should also look at their spending habits and budget to see if any money can be put into savings.
Keep Your Job As Long As Possible
Remember, each extra year you work increases your Social Security benefit and is that much longer that you get to take advantage of health insurance, life insurance, and other perks that your employer might offer. Working longer also gives you more opportunity to save and decreases the number of years your retirement income must cover. If already retired, you might consider a part-time job.