Did you start saving as soon as you got out of college? Can you count on your steady paychecks for the rest of your life? Does the term retirement give you jitters?
3 reasons that induce fear and anxiety in most people who are nearing retirement
- The possibility of running short of money or living too long
- The rising cost of healthcare
- The stress of maintaining the same standard of living during retirement
You can lower your anxiety and overcome your retirement worries with careful financial planning.
Know Your Numbers
Calculate your finances to ensure that you don’t outlive your retirement savings. Knowing the numbers will help you plan ahead and live a comfortable life when you no longer have a nine-to-five job. But try keeping the worst-case scenarios in mind so that you can handle sudden shocks without losing your lifetime savings.
Be Frugal with Your Finances
The best way to conquer your retirement fears is to be frugal with your lifestyle. Frugal does not mean you resort to a penny-pinching approach. It only means that you should spend less and save more. Make small changes like managing with one car, repairing instead of replacing, cutting down on eating out, buying only what you need, selling the clutter, cutting down or eliminating smoking and drinking, canceling unused subscriptions, and saving energy.
Diversify Your Financial Portfolio
Think beyond bonds, stocks, mutual funds and ETFs. If you can open a self-directed retirement account there is a myriad of alternative investments out there beyond what the normal financial advisory firms offer. Contribute to 401(k)s and workplace retirement savings plan and take advantage of company matches. This is “free money” and will help to build your nest egg. In company plans, keep up to date about new investment options which become available. Diversifying your portfolio will ease your retirement anxieties. Shifting some of your savings to conservative vehicles will help ensure that your finances will not be as vulnerable to market fluctuations.
Take Advantage of Low Interest Rates
Home Ownership is a dream for most people. Interest rates are at almost record lows. If you have a mortgage, speak with a professional to see if refinancing would be a good option. Remember, with a 30 year fixed mortgage, it takes the first 23 years to pay off the first half of a mortgage and 7 years to the second half. So many people refinance to a lower rate ,let’s say at 5 years, but they sign right back up to a new 30-year amortization. If you are fortunate to refinance to a lower rate, don’t add more years to your plan – it doesn’t make sense – it does to the mortgage lender but not for you.
Seek Social Support
Retirement brings you the opportunity to catch up on your social calendar. As you get close to retirement, ease into your new life style.Go out, make new friends, explore your artistic abilities, take up cooking classes, discover your knack for creativity, attend seminars, travel to places and catch up with old friends at your local coffee shop. Spend more time socializing and less time worrying about your payments and taxes. The transition from a profession with a steady source of income to a newly-retired person surely invites fear and anxiety but if you follow these 5 simple tips, it will help you to overcome a lot your financial fears and enjoy the fruits of your labor.
Proper retirement planning is all about making the right investments. To explore safe investment options that can maximize your returns, contact us at (866) 639-0066.
Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning company based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last ten years has turned his focus to self-directed ira accounts and alternative investments. If you need help and guidance with traditional or alternative investments, call him today (866) 639-0066.