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Top 4 Post-Retirement Financial Tips

Finally! After years of hard work and dedication, you can retire and spend your time enjoying the things you love. You can pursue that long-awaited international trip or take up a forgotten hobby. But, in order to pursue these activities and live out your retirement years, you will need money. Although you spent a significant portion of your life saving and planning for retirement, the process should continue even after retirement in order to maximize the chances of continued financial security and freedom.

Experienced investment advisor Mark Matson provides post-retirement financial tips to help your savings last well into the golden years.

1. Know Your Withdrawal Rate

Assuming you started your retirement savings at an early age and consistently contributed to it, you potentially have a large nest egg. But the question is how much you can reasonably withdrawal from it each year without using every last penny before the end of your lifetime? Generally, the early years of retirement are when individuals are the most active and spend the most. If you spend too much, though, you may wind up reducing your income for later years. Know how much you can spend comfortably each year.

2. Create a List of Things You Want to Do

After decades in the workforce, once you retire you have complete control over how your time is spent. Many look forward to retirement because they can do things they’ve always wanted to. You can travel, go on a cruise, go back to school, or start a business. But, all of this will cost money. To help ensure you can enjoy your retirement and stay within budget, create a list of all the things you want to do and how much they will cost. Approach these luxuries as a financial objective and confirm that you have the money to pay for them.  

3. Cut Spending Where You Can

Many individuals spend more money on leisure activities during retirement. Now, if you factor in necessary expenses, such as your mortgage or rent, food, and utilities, your monthly spending instantly increases. Review your income and spending, and identify areas where you’re spending more than you expected, or are spending on unnecessary items.

4. Work During Your Retirement

Today there is a growing number of retirees who choose to work after they retire. In contrast to spending each day doing anything they’d like to, they choose to work after retirement as an additional source of income, to make social connections, and avoid isolation. If you find a job you enjoy and work during your retirement years, the financial aspects of your retirement planning will be much easier.

 

Staying Sensible During Market Records

diceIt’s almost like a fact of life; the market will go up and go down, break records and hit all-time highs or lows. In short, the stock market can fluctuate as we have always seen and once it breaks records, people can swing either way about it. Whether they are positive or negative, one could think that becoming active on the market is a good course of action. On the other hand, another might feel as though they missed the mark and they can’t get in on the offers for the time being.

One thing is certain, no matter what the market is doing, investors should stay sensible. If the market is breaking records, it’s nothing new, it has happened before so new highs should not merit excitement or worry. Take it from Zack Shepard, the vice president of Matson Money, over the long-term the market generally rends to rise, so new highs may not be worth the hype. No one can predict what the market will do. Just because something may be trending now, tomorrow it could be down in the dumps. Financial coaches need to rein in their investors and discuss how market records can change in an instant.

If you are going to jump in and buy, hold on to it or just stay in it. Take for instance data published by the Center for Research and Security Pricing (CRSP) with respect to the CRSP 1-10, a stock market index representing the entire market cap of the New York Stock Exchange and other exchange equivalents.  According to the historical data for the CRSP 1-10 index, the average 5-year annualized return after a new high since 1926 is 9.02%! Of course, past performance is no guarantee of future success. This index return information does not reflect actual investor results and no representation is made that your portfolio would experience similar results.

Indices are unmanaged, cannot be invested in directly and their returns do not represent the performance of any actual fund or transactions and do not include management fees, transaction costs or expenses. Just looking at the CRSP historical data, holding out could be beneficial, but that’s the beauty of the market.  It can be a hard game to play, but if you look at your long-term portfolio and manage it well with diversified stocks, you could be on the way to more stable financial footing.