There are few things that Americans look forward to as much as retirement. With the right planning, many people can spend decades enjoying life without the constant rat race of careers. However, retirement income is a source of anxiety for many people. Even if you have extensive retirement savings, an annuity, or other income planned, there are still tasks to be attended to as you near retirement age.
1. Set a realistic budget for your retirement income.
What exactly do you need to retire? The answer is likely lower than you think. As any retirement calculator will confirm, retirement life is generally less expensive than career life due to lower expenses. There are also possibilities for downsizing, such as taking a smaller home or sharing a vehicle. Your income will be comprised of two categories: guaranteed retirement income and investment income. Your guaranteed monthly income will include pensions, social security income, and any other source of income that is unlikely to change or be used up. Investment income will vary, but is also an important part of most people’s retirement income.
2. Begin moving investments.
As retirement approaches, it is time to take stock of invested money and begin planning for sustained returns rather than growth. Most experts recommend that you move investments from high risk outlets such as stocks into stable mutual funds, bonds, and other less volatile avenues. This will protect you from having to make huge lifestyle changes due to ups and downs in the economy.
3. Plan for health care.
Unlike most expenses, health care costs will likely increase in your golden years. Medicare will help to defray these expenses. In addition, it is time to investigate any ongoing medical care offered as part of your retirement benefits. There are also low cost supplemental plans that can help. Know what is covered and what you can realistically expect to pay as you age.
4. Take advantage of time off.
Many professionals of the soon-to-be retiring generation have substantial amounts of paid time off accrued. You should plan to use this time before your official retirement date or cash it out if your employer allows this. For many people, this can be a substantial amount of money, so do not merely let it go.
5. Plan for a successful transition.
Transitioning to retirement can be difficult. Many people have to make an abrupt switch from full time and full speed ahead careers to endless unplanned days. However, it is best for physical and mental health to begin planning early for your new-found free time. Plan a vacation, find volunteer gigs, and make the lunch dates you never got around to planning. Many people even work part time in a low-demand field that they’ve always loved or consult in their career industry. Using this time productively and enjoyably is key to enjoying these final decades.
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