Most people think numbers determine how much stress they will face in retirement, figuring the more money they have saved the less they will have to worry about. But, while money is an important factor in retirement planning, it is not the determining factor, not even close. The real way to avoid stress in retirement is through preparation. Here are five steps you can take now to avoid fretting your way through those golden years: Have a plan for what you want to do. Will you travel? Develop a hobby? Schedule time with your grandchildren? Work part time? Volunteer? Think hard about how you would like to fill the extra time you will have and then set a schedule. You may think giving up a set schedule is something to look forward to in retirement, but most people find that they value a reason to get up in the morning. Retirement is not vacation. Having a purpose will make your life much more joyful and stress free. Retire when you are financially able, not when you think you should. There is no guarantee that you will be able to retire when you reach the government mandated full retirement age. That all depends on your timeline, your budget, your savings and your potential income stream. Align all of that and you’ll be well on your way to a relaxing retirement. Treat yourself to some discipline. Exercise, eat right, maintain a set sleeping schedule, get dressed and leave the house at least once a day. Retirement is not an excuse to abandon the healthy habits that allowed you to earn that A.A.R.P card. Define your retirement the way you want to, not the way you’ve been told it should be. You’ve put in the work, you’ve amassed the savings, you’ve stuck to your plan. Now, you get to spend your time the way you choose. No two retirements look the same. If… | Read More »
Retirement planning
Finding a labor of love
In some ways, a healthy retirement relies on the proper choice of preposition. You want to retire to something – a passion or hobby – rather than from something. Want to retire so you can spend more time with your grandchildren? Great. Can’t wait to retire so you can stop working at a job you find uninspiring? Okay, but then what? Rising life expectancies and opportunities for good health have produced a generation of octogenarians who crave activities and may need some additional resources to fund them. That’s why we often recommend that the best retirements sometimes include work. We certainly condone leaving a job you no longer enjoy if you have the financial resources to do so, but, if you have no other plans, consider part-time work in a related field. Work as a consultant, tutor, freelance writer, receptionist or cashier. The wages you earn will help you avoid dipping into your retirement funds, which will give them a better opportunity to grow. Even if you’re very confident you have set yourself up financially for a successful retirement, you still might crave the opportunity to feel useful. In that case, volunteer as a coach, mentor, docent or usher. The idea is to stay active and productive. Give yourself a reason to leave your house, challenge your brain to keep it sharp and allow yourself opportunities for social connections. If you love your job and enjoy your co-workers don’t retire just because your birthdate says you can. Social Security calculates your monthly payment based on your 35 highest wage earning years. Most people earn much higher wages in their later years of employment than they did in their early years. So, the more years you work earning the higher wages, the more lower-wage years you will replace. This will boost your monthly Social Security payment (up to the highest Social Security benefit amount you can receive , which is $2,788… | Read More »
Seven steps to preserving your independence
How we age depends on so much more than genetics. The good news is that, even though it isn’t always easy, we do have control over most of the factors shaping our golden years. Last year, Northwestern University released a study of “super agers”, people over 80-years old who have maintained excellent cognitive function. The study noted a clear link between brain health and positive relationships. Want to maintain your independence? Call a friend to chat! In addition to cultivating and maintaining social connections, we’ve identified six other key factors that influence how we age and you have some control over them all. You just have to lean in. Physical strength. You don’t have to go to the gym every day, but you do need to remain active. Take a walk, ride a bike, go for a swim, play a little pickle ball, practice yoga. Taking fitness and just plain activity seriously enough to maintain a basic amount of body strength is also very important for fall prevention. Most doctors recommend 30 minutes a day. Home modifications. As physical needs change, people need to adapt their environment to accommodate those changes. Install handrails, clear the floor of any throw rugs, move furniture to ensure a clear path through it. Arrange your cabinets to make things you use every day readily accessible. Add floor mats and guard rails to your tub, check the lighting in your bedroom to make sure you can see at night. You don’t necessarily have to cook your own meals, but you do have to make sure you are consuming nutritious food. Home delivery services make that very easy. Pay attention to what you put in your mouth and make sure you keep healthy snacks in stock. Stock up on freezer containers so you can split one large meal into several smaller and freeze them for later use. Of course, having a driver’s license makes transportation much… | Read More »
Age is just a number, especially in retirement planning
One of the most important numbers most people consider when they plan their retirement is also the one that gets them in trouble: their age. The right way to consider age in financial planning is to use it to plan an effective retirement horizon – how many years will you need to fund and how likely are you to need to pay for some form of long term care. The wrong way to consider age is to use it to defend an otherwise random decision to stop working. It is extremely dangerous to base your retirement on the feeling that you are entitled to it. “Listen, I’ve worked hard for 35 years and I’m already five years older than my dad was when he retired,” goes the common though flawed rationale. “I’m done. I’m out. “ Asked what they intend to do when their money runs out (as it probably will), they respond, “I’ll figure that out when it happens.” Well, that won’t work. You can’t take out a loan to fund your retirement, and, as your money runs out you find yourself less and less in control of the life choices you took for granted. To establish the financial freedom you need to enjoy your retirement, you need to be proactive. Here are seven steps you need to take before you decide to retire (and none of them involves your age): Establish a budget. This tedious task yields a key number to consider when planning your retirement – how much money you will need each month. Of course your retirement budget will look a little different than your working budget – for one thing you’ll be withdrawing, not contributing, to a retirement plan. But the best place to start planning is by figuring out your outflow now. Develop disciplined spending habits. Don’t spend money you don’t have. Plan for large expenditures and try to keep debt under control. If… | Read More »
The changing world of rotary phones and retirement
Time was when a pension and Social Security would provide most people all they needed for a secure retirement. But, back then, people were content with working the same job all their lives, watching just three TV stations, and using a rotary phone with no texting or video. People now have an infinite number of choices for career opportunities, entertainment and social engagement. Furthermore, today’s technology is powerful enough to meet our needs almost instantaneously. These innovations have made our lives better in ways that are almost too numerous to count, but there’s a trade-off. We didn’t have as many choices in the age before cell phones and the internet, but most of us could rely on a pension that was provided for us, risk free, by a company that assumed all of the responsibility for our retirement. So, the trade-off has been that we now have more individual freedom in the form of greater choices, but we have less security in that employers no longer take on the responsibility for providing us with a secure retirement. Under the pension system, workers didn’t have a choice about how their retirement would be funded. The company took care of everything. Those days are gone. Providing for a secure retirement is now another of the many “choices” we are free to make on a daily basis. It’s up to us and, apparently, left to our own smart devices, we are not faring well. Only a third of working Americans are saving money in an employer-sponsored or tax-deferred retirement account, according to U.S. Census Bureau’s recent figures. And, according to the Economic Policy Institute, the average retirement savings of all families in America is just $95,776. Even those frightening numbers don’t tell the whole story because many of the surveyed families reported zero savings, with ultra-wealthy families pulling up the average. A more accurate gauge may be the median savings rate, or those at… | Read More »