Retirement is supposed to be the time in your life where you finally get to relax and enjoy your life. But the thing about retirement is that it can be incredibly stressful if you aren’t financially stable enough to not have to work.
That is why getting on the right plan for retirement is preached as being so key for you in your youth. By the time you get to retirement, it is too late to “save for retirement” and you need to figure out the way you’re going to live in retirement or keep on working. No one wants the latter.
These are tips for managing your finances in retirement so that you can enjoy your latter years relaxing and having fun rather than worrying about money.
Create Retirement Income
While saving for retirement is something you should certainly focus on during your working years, the goal is to turn those retirement assets into retirement income. When you have guaranteed retirement income and aren’t making unpredictable withdrawals from your retirement account, things are likely to go far smoother.
Annuities are a good way to achieve this as many of them have a guaranteed monthly payment to the annuity holder and leave little in the way of surprises. Social security and retirement accounts will do most of the legwork but filling in those gaps is a key.
Know That This Money Has to Last You
Because you are no longer working, you are likely making far less money in retirement than you would in a year of working. Prioritizing how you spend that money is key. If you over-exert yourself helping out family members or making spur-of-the moment purchases, you will find yourself without the money that you need to pay your bills.
Mapping out your spending and knowing where your retirement funds are being spent is as important as having the income itself.
Hold off on Social Security If You Can
Social Security is a great source of guaranteed monthly income for the days between retirement and end of life. But it can be even more beneficial if you hold off on starting at age 62 and start at 67 or later. As a matter of fact, it can be the difference of hundreds of thousands.
The later you start, the higher your standard of living can be. There is a Social Security calculator to help you assess the best time to start receiving Social Security as part of your overall retirement plan.