The long-awaited day has finally arrived: your retirement. Hello hobbies, hammocks and hours of leisure. Hello indulgence. And hello carefree living. Finally.
Or so you thought.
For starters, the golden years typically last at least two decades. And certain costs are guaranteed to rise—namely healthcare expenses. That includes not only medical payments but assisted-living cost such as in-home care, daily assistance support or live-in nursing care. Your nest egg needs to absorb these expenses without running out prematurely.
So while it’s time to celebrate, it’s not time to let your guard down. It’s not time for reckless abandonment.
You can still engage in that special activity you’ve been looking forward to. And probably go on that dream vacation you’ve been planning for years.
But be careful to avoid making mistakes typical of retiring newbies. Because the consequences can dramatically alter the quality of your retirement. They can eat into your precious savings, and cause you irreversible financial harm.
During your first years of retirement, follow these basic rules to protect your financial security for the rest of your life:
- Continue to diversify your financial portfolio. The temptation to shift all investments into cash and bonds is natural. But with interest rates remaining stubbornly low, diversifying with stocks and higher-risk investments is more likely to generate higher returns. And that’s critical in order to avoid outliving your savings.
- Continue working with your financial adviser. If you don’t have one yet, establish an ongoing relationship with a trusted expert. Commit to meeting annually, or more often if necessary, to update your portfolio to adjust to your needs as you age.
- Be careful not to spend too much too quickly. It’s natural to indulge after years of scrimping and saving. But excessive or impulsive consumption in the early years of retirement can devastate your nest egg. That leads to the next rule.
- Continue planning for the future. Retirement can last up to four decades! If you’ve dreamt of traveling, purchasing a luxury automobile, or buying a dream home, yacht or vacation cabin, make sure to calculate your expenses beforehand. Create a plan based on your retirement income, current expenses, and anticipated future costs for at least the next 30 years. Then calculate how much expendable cash is leftover each year for extras. Continue balancing needs with wants throughout retirement.
- Take care of yourself. Nothing puts a dent into your financial security faster than a serious illness or disability. While you cannot control all outcomes, committing to a healthy lifestyle significantly increases your chances of staying healthier longer. That includes staying in shape, eating well, not smoking, and taking care of health issues immediately rather than delaying care. Mental health care management is equally critical. Stave off boredom, loneliness and depression by staying active, volunteering and engaging in meaningful activities. Start a hobby, belong to a gym or join a club. The options are limited only by your imagination and interests. Just make sure to continue to be mindful of costs.
Retirement should be relaxing and fulfilling. But it requires continued vigilance and an ongoing commitment to careful spending and thorough planning. Continue spending wisely and thoughtfully, and your golden years promise to be your best ones yet.
At Silverman Financial, we work with you to secure a lasting retirement that satisfies your needs for the rest of your life while allowing you to enjoy the fruits of your labor.