Congratulations – you are finally retired! You deserve that vacation, those meals out 3 nights a week, and the car of which you have always dreamed. But what is the real cost? A common mistake many retirees make is living beyond their means. There is a “why wait” attitude that many retirees have that can lead to disaster. You still need to have a budget and spend modestly, not like the money is burning a hole in your pocket. If you live a modest financial life in retirement, you will reduce the risk of outliving your savings.

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So, we know that you have enough to keep yourself busy, and you have figured out what you are going to do with all of your time – now, we have to discuss the realities of aging.

You have arrived in retirement and the fun has begun, but you are also frustrated with the difficulties of aging. This frustration is something new. It is hard to prepare for something you have not experienced before. Prepare you must. You will move a bit slower, things won’t taste as good, your sight will be off, etc. As long as you maintain a healthy lifestyle, you will endure. Maintain a positive outlook and enjoy!

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Do you have enough to keep yourself busy?

Most of my clients say they have so much to do when they retire, but for many that only lasts a couple of months. After all of the “honey do” items have been completed, and you take that trip to visit your Grandkids, what is next? A little relaxing and doing nothing is fine for a bit. Often, too much free time leads to overeating and overspending. Try to find that perfect combination of things you enjoy doing, pursuits that are meaningful, and relaxing to establish a healthy balance for your time in retirement.

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Most couples spend the bulk of their day apart; working, running, errands, or doing volunteer work. The separate lives we lead while working come to a screeching halt upon retirement. Can your relationship handle it? Whatever portion of your time you now dedicate to each other is very different from a 24/7 life together. You need to think now, before you retire, about how you will spend your time together and apart. Communication is key. Discuss your expectations as well as your individual and joint interests. Things will be a little strange in the beginning, but will smooth out as long as you consider the real changes that come to your relationship with retirement.

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Q: I have $34,000 that I will not need to use for 8 months, and then I plan to use it to fix up my home. Why can’t I invest this so I can earn more than 0.20%?

A: If you need to use your funds in less than 24 months, you cannot afford to invest it. This is money you have set aside or saved specifically for a need, i.e., your kitchen. This type of money needs to stay liquid. A savings account or short term CD is your only option.

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Thinking about retirement may become easier if you just ask:

Who? Who is most important to you? Your spouse, partner, kids? When you plan youR retirement, you generally are thinking about yourself and those who are important to you, their care and wellbeing, how they fit into your retirement picture,etc.

What? What assets do you have, or can you accumulate to make your retirement a reality? Look at where you are now and do regular financial checkups of what you have accumulated.

When? When would you like to stop working? Just because you reach full retirement with Social Security at age 66, does not mean you are ready to hang it up. You need to feel comfortable mentally as well as financially for your when.

Where? Where do you want to retire? I have no intention of moving but many others dream of moving. Do you want to downsize? Relocate? Have more than one retirement home? Determining where you retire may plan into your when you retire.

Why? Why do you want to retire? I often ask my clients if they know what they will do with their time in retirement. If you cannot answer this question, you may not be ready to retire.

These 5 W questions are ones we all learned as children. They are just as important for us to ask ourselves as adults.

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Most of us have some dream of retirement. Retirement is different for everyone. Some dream of travel, others of spending time with Grandkids, some wish to volunteer, but no retirement? For some, that is their dream.

Many people love what they do and cannot imagine not doing their chosen profession until they pass on. The idea of retiring would be certain death in their eyes – their work is their passion. If you fall into this category, you must still plan for retirement even if you delay that date forever.

Illness, disability, or death or disability of a loved one, may all be reasons you have to retire before you want to. Planning for retirement at a “normal” age will put you in a position of choice. When working is not working at all, it is much better to be prepared. Choice and preparation equal peace of mind for your future.

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If you look at the surface, you might pick the SEP IRA because the limit is $51,000 vs. $17,500 for a 401(k), not including the over 50 provisions. If we scratch the surface, we learn that the SEP IRA is really limited to 20% of your income after a reduction for self-employment tax.

Crunch the numbers; it is the only sure way to determine which type of retirement account will allow you to contribute the most.

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Every good financial plan has a built in buffer, or stash of cash, you will need in case of emergencies. The questions becomes: how do you calculate what is right for you?

You need to look at your essentials:
Housing, food, clothing, transportation, health insurance, and utilities are some of the basic essentials we all need. It is a good idea to have 6 months of these essentials stashed in a savings account as a safety net.

How do you get started?
Once you have established what your list of essentials will cost you each month, you need to start stashing. If that monthly amount is $2000, then start saving $500/mo. until you have your full buffer saved. Small bites will allow you to accumulate your stash.

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