PERSONAL FINANCES IN RETIREMENT

Transcription

1 PERSONAL FINANCES IN RETIREMENT 1

2 CONTENTS Introduction 3 3 Common Retirement Planning Mistakes 4 What Should My Investment Portfolio Look Like? 5 1

3 How Much Do I Need For Retirement? 6 Supplement Life After Retirement 7 Conclusion 9 Contact Us 10 2

4 INTRODUCTION Retirement should be a time in life to travel, relax, and invest in hobbies. However, more and more individuals are stressing over post-retirement finances. Life may change after retirement, but the basics of financial planning do not. As a retiree, you should still plan a budget, monitor expenses, and prepare for the unexpected. This comprehensive guide will address: What retirement mistakes can I avoid? How much do I need to retire? What should my investment portfolio look like? How can I live a happy and stress-free retirement? Most retirees spend years funding their nest egg, so it s important to avoid common retirement planning mistakes. 3

5 3 COMMON RETIREMENT PLANNING MISTAKES 1) Not maximizing a 401k match If you work for an employer that offers a 401k match, take advantage of this financial opportunity. Some people make the mistake of not investing and missing out on free money from the employer. It s never too early or late to start saving. Every dollar counts. 2) Cashing out too early A critical mistake people make is withdrawing from their 401k prematurely. Some individuals cash out early due to a job loss, paying off credit cards, or handling a financial crisis in general. While this seems like a viable option, it will only temporarily fix the issue. Once that money is gone, it s gone forever and that leaves you in a less than ideal financial position after retirement. Just remember that dipping into your 401k can have long-term effects on savings. 3) Not planning for post-retirement surprises Post-retirement surprises include everything from a big stock market decline to a major unexpected expense such as medical, house repair, or kids needing financial assistance. It s important to put aside money so you are prepared for any future surprises. 4

6 What should my investment portfolio look like? Our advice is to invest more heavily in stocks in the early years of working and then gradually reduce your stock exposure over time. For example: Age: Age: Age: Age: % stocks 15% bonds/cds 70% stocks 30% bonds/cds 60% stocks 40% bonds/cds 50% stocks 50% bonds/cds Age: 60- retirement 35% stocks 65% bonds/cds Age: Retirement years 25% stocks 75% bonds/cds While this is just one of many financial opinions, it is strongly suggested that everyone use a financial advisor to help with retirement budgeting/ planning, investments, and advice on when to take out Social Security or your 401k. 5

7 How much do I need for retirement? Cash needed after retirement depends on the individual. Many retirees noted that their expenses have not decreased, but instead shifted from some categories to others. For example, one senior we interviewed said that while working I had more commute and clothes expense. In retirement, I have more hobby expense (golf in my case) and the expense of having a winter home in Florida. In this scenario, expenses did not decrease so the retiree had to plan for living off previous income. 6

8 SUPPLEMENT LIFE AFTER RETIREMENT There are a variety of ways to supplement life after retirement. Some retirees may need more cash inflow to support their hobbies or pay for home or medical expenses. If so, we recommend looking into a part-time job or a reverse mortgage. Part-Time Job Some retirees miss the satisfaction of working everyday. In fact, finding a part-time job can help seniors fight depression while supplementing finances after retirement. Retail positions: Do you have a sales background? A position in retail could be a great fit. Retail is also a great option for retirees who miss daily face-to-face interaction. Many retail stores have a high demand around the holidays, so the position can be as short-term or long-term as you want. You might get an employee discount, which is another perk. Tax preparer: A part-time tax preparer is an ideal job for retired accountants. This job is seasonal with the bulk of work between January and April, leaving plenty of time to relax in the following months. Freelance Writer: Most journalists view freelance work as a way to not only make money during retirement, but a way to keep up with their writing skills. Freelance work is not just limited to journalists. Anyone with a passion for writing or an expert in a particular subject (finance, fitness, home improvement, etc) can contribute. 7

9 Crafter: Are you talented in a particular craft? If you are constantly receiving praise for your knitted blankets or woodworking, consider selling your finished products online. This part-time job is a favorite among retirees. Enjoy your favorite hobby while making money. Reverse Mortgage More and more seniors are looking at a reverse mortgage. A reverse mortgage allows homeowners, 62 years or older, to use the equity in their home and convert it into cash. The cash is distributed to the homeowner monthly, in a lump sum, or line of credit. The benefit of a reverse mortgage allows seniors to continue living in their home and use the extra cash for remodeling, paying medical bills, or other retirement expenses. 8

10 CONCLUSION As we stressed earlier, life may change after retirement, but the basics of financial planning do not. Meet with a financial advisor, create a budget, and plan on post-retirement expenses so you can be prepared to live a happy life after retirement. 9

11 CONTACT US 3401 W. Broadway Business Park Ct., Ste 213 Columbia, MO Toll Free ( ) Monday-Thursday 8 a.m. to 6 p.m. Friday 8 a.m. to 5 p.m. Central Time or visit: 10

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