Enjoying your lifestyle through retirement is the key to vital and healthy aging. When we are given more free time than we know how to use, we can develop sedentary habits that can cause mental and physical health issues down the line. This factor can be exasperated by not having an adequate financial plan to fund retirement activities. It is important to plan for your life post-retirement if you wish to retain your financial independence and maintain a comfortable standard of living when you are no longer earning.
Key Questions for Creating Secure Financial Plans for Retirement
The average life expectancy for someone 65 years old is over 19 years according to the Social Security Administration. With such a long retirement, you should start developing a financial plan as early as possible. The goal is to create a plan that gives you the financial freedom so that you can continue to enjoy the lifestyle that you are accustomed to through retirement. Here are some important questions to ask yourself when creating a financial plan for retirement.
- What age do I want to retire?
Selecting the ideal retirement age one of the post important elements when planning retirement. You want to be young enough so that you can be healthy enough to enjoy the things you have planned, while waiting long enough so you don’t run out of money. For some people, working just a year or two into retirement can make a big difference in long-term funding. Delaying social security withdrawals, for example, is one way to dramatically increase future retirement income.
- How much money do I need to support my current standard of living?
To make this process successful, you should separate your expenses into two categories; necessary costs and discretionary expenses. Necessary costs include mortgage, utilities, and food, while discretionary expenses cover vacations, fine dining, and entertainment. By doing so, it will be easy to see where you can cut costs if your actual retirement income falls short of your estimates. It is important to leverage financial resources when developing a long-term financial plan. Tools such as retirement calculators can help provide a clear picture of retirement expenses and social security income.
- What are my retirement income sources?
Creating a working retirement plan requires a mix of income sources such as Roth IRAs, 401(k), social security, etc. Identifying all of these potential income streams is essential for making future investment decisions. Depending on the situation, your financial advisor may recommend putting more money into savings or investing in income-producing options such as real estate or annuities.
- Do I have a plan for unexpected events?
It is important to have contingency plans to account for unexpected financial snags in retirement. These could include losses in your investment portfolio due to economic downturns, home repairs, or health issues. For contingency funds, you could earmark money for family inheritance, but hang on to it for emergencies by holding it in your estate plan instead of putting the money into trust funds. Leveraging home equity is also a viable source for many people who are making financial solutions for retirement.
Financing Your Lifestyle Through Retirement
Even while using financial planning techniques, it can still be a challenge to fund a comfortable retirement in today’s economy. Many people imagined they could rely on their 401(K) savings and their investment portfolio to finance retirement long enough to delay claiming Social Security and maximize benefits. Unfortunately, rising costs of living are making it difficult to reach financial security with this plan.
Just like your 401K, IRA, or annuities, home equity is a powerful financial tool that can greatly enhance your retirement funding plan. Contact a FAR representative today to learn more about the benefits of reverse mortgages and how they may help you secure long-term financial freedom.
This article is intended for general informational and educational purposes only, and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.
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