Savings vs. Income in Retirement

,
Recurring Income in your Retirement?

When thinking about retirement, you should make sure to have a clear understanding of savings vs. income. When thinking about retirement, many think about a particular savings amount that they would like to reach. This type of thinking comes from how general purchases are made. If you want to buy a computer, you would save the amount of money that you would need to buy a computer. However, saving for retirement is not as easy.

The issue with retirement planning is that you do not know how exactly your investments will perform. You also do not know how long you will live. When thinking about retirement, many recommend that you have at least 70%-80% of your pre-retirement income. Considering that you might spend additional money on travel and leisure in retirement, only being able to spend 70%-80% of your pre-retirement income may not be comfortable.

You should carefully plan how you want to live in retirement so that you can determine the income that you need. Reducing your expenses on housing and transportation can positively impact your budget and give you more flexibility. Once you determine the income level that you will need, you should determine the approximate amount of savings that you will need. Figuring out your desired lifestyle is an important part of determining your needed savings and income.

Many individuals do not truly know how much money they would need to comfortably retire. For example, you are only supposed to withdraw 4%-6% every year of your savings for retirement. If you have $300,000 saved, you would only be able to withdraw $12,000 to $18,000. According to SmartAsset, the median average net worth for a head of household aged 55-64 in the United States is only $187,300. For many of them, Social Security benefits that average $1,354 is there only source of income. Considering the somewhat fragile state of Social Security, relying on Social Security for a significant part of retirement is not a good idea.

Many individuals planning for retirement today are planning to work in their retirement. The reality is that working when older can become difficult because of health issues. There is also a good amount of age discrimination in many companies. Obtaining a new job at 55 years of age is difficult. At 70 years of age, obtaining a new job can be nearly impossible. Also, if your spouse needs support, working in your later years can no longer be an option.

Another important point in determining your savings and income needs is determining what sort of housing you will want in retirement. One of the goals of many is to own outright a house or apartment. However, you should consider the interest rate on your mortgage. If the expectation of your investment returns going forward is greater than the interest rate on your mortgage, you should keep your money in your investments.

Another consideration with housing is the liquidity of your assets. If most of your money is in your house, you will not be able to use those savings for emergency income. You should also consider the riskiness of your investments. Many recommend extremely safe investments for your savings. Having all of your investment in riskless investments is probably not a smart choice if you are planning to live many decades after you retire.

You should carefully consider your income needs. You should also plan for increasing healthcare costs as you age. Also, you should plan that as you age your mobility may decrease so that you will need to pay for additional expenses such as a stairlift that Medicare does not cover.
https://www.forbes.com/sites/kristinmckenna/2019/07/10/debunked-6-myths-about-retirement/#439c8a955e8b

To Work Or Not To Work In Retirement. That Is The Question.

,
retires working

The retirement age of 65 was chosen for Social Security at a time when the average life expectancy was 67. Overall, life expectancy has trended up since then, so it should come as no surprise that 9 million Americans over age 65 now work either full time or part-time.

That’s nearly one in five people who theoretically should be retired. This trend towards working at least part-time after age 65 is one of the realities of the new economy that gets relatively little press.

This decision-making process looks different depending on where you are in life. If you are already retired and are considering returning to work, that’s a very different scenario than if you haven’t yet retired and are thinking about how you want to handle the upcoming years.

Social Security
The rules for Social Security are such that it is best to simply delay starting those payments. The longer you delay starting Social Security, the larger your check will be.

If you are in good health and your income can adequately support you, delaying your Social Security benefit until later is a wise move. But it gets a lot more complicated if you have already started receiving your benefits and are considering returning to work.

If you resume working while drawing Social Security, your benefits can be reduced if you earn over a certain amount of money per year. If you are already drawing Social Security, you should meet with a financial advisor and find out exactly how returning to work could impact your Social Security benefits.

Time is Money
If you have already retired and you are thinking of returning to work, take a few minutes to consider your current lifestyle. If you are shopping sales, cooking from scratch and generally using your time to live well for very little money, returning to work may not be as profitable as you imagine.

Before you brush off your old resume, calculate how much lunch at a cafeteria or eatery could likely cost and factor in expenses like work clothes. It might make more sense to clip a few more coupons or pursue a casual income instead of a job.

Other Obligations
Think about how you are living now and whether or not you have taken on personal responsibilities without really thinking about the obligation it entails. For example, perhaps you have fallen into the habit of keeping your grandchild a few hours a week at your place.

Ask yourself: Is this de facto free daycare? Will it be a hardship your family to have to look for a daycare provider if you are no longer available?

Your Health
Your health may seem fine while not working, but can it stand the burden if you resume working? If you are in fragile health, working full time may be financially counterproductive if it leads to a big increase in medical expenses.

Casual Income
Instead of getting a job, it may make more sense to pursue a casual income. These days, it is possible to pursue part-time, flexible work in a way that didn’t exist historically. This may make more sense than returning to a regular job.

“If you rest, you rust.”
Money is usually the primary motivator for continuing to work, but it’s not the only reason to keep working. Some people believe that staying active helps keep you alive and maintains a higher quality of life.

Working part time may be a great compromise. It can provide a great work-life balance while easing the financial pressure.

The Benefits of Having a Schedule in Retirement

Retirement

In the retirement years of life, many people are often freed from the obligations that they had when they were working. This can be a highly valuable time in one’s life, and yet it is often not treated as such.

There are many benefits to having a schedule in retirement, including increased productivity, improved health, and more time to spend with family members.

For some people, this may mean going back to work on their terms or volunteering at chosen organizations. There needs to be a balance between personal desires and responsibilities, though, so if you’re finding yourself being pulled too much toward either side, then take steps now towards getting your priorities straightened out.

Daily Schedules Are Important for Retirees
Daily schedules are important for retirees, too because even though they have more free time to do as they wish, the structure provides a certain focus and allows for creativity and new ideas. A solid schedule can also remove a lot of uncertainty that comes with change.

Schedules are important for retirees because they provide stability and structure to retirement. They also help with any uncertainty that may come from change. If you’re finding yourself being pulled too much toward either side, then take steps now towards getting your priorities straightened out.

It Helps to Start a Weekly Planner
Talk with someone who has retired from a similar career. Ask them what they do each day and week on their schedule. This can give you some clues about where to start when designing your daily routine for the coming years of retirement life.

The point is that we must keep ourselves busy during retirement by maintaining a weekly planner, which will help us stay focused so that our days are not wasted. If we allow things like Facebook, TV shows, movies, video games, etc., to become our main activity, we could fall into a rut and end up wasting a lot of valuable time.

Try Some Morning Activities
Early in the morning, before we begin our daily tasks and work routines, try out some of these activities to help us stay focused on what matters:

-Read a spiritual book. The Bible is an excellent choice for this purpose because it has so much wisdom that can help fill up those empty hours with meaning and satisfaction.

-Meditate for fifteen minutes or more by listening to music or reading from your favorite inspirational text. This will bring peace into chaotic situations while also providing you with fresh ideas about getting things done during the day ahead.
-Exercise and get outside to enjoy nature. Start gardening, try yoga, or go for long walks to center yourself.

Exercise is one of the best ways to get your blood flowing and give yourself the much-needed energy you need for the day ahead. Take advantage of all that nature has to offer by going outside instead of sitting inside, staring at a screen, or watching TV.

In the Afternoon
-Orient yourself. Take a walk in your neighborhood and get to know the people around you, or visit that museum you’ve meant to go to for years now.

-Do something relaxing like taking a bath or reading an interesting book. It’s important to take some time every day just for yourself, so make sure this is done at least once each afternoon.

-You could spend some time learning online or by visiting a library to stock up on good books.

-Take some time to socialize with others and volunteer for your favorite causes.

In the Evening
-Eat a nice dinner. Spaghetti sauce, lasagna, and meatballs are just some of your options for delicious dinners that can be made in advance. You could also make soup or bake cookies to enjoy on a cold winter’s day – whatever suits your taste buds!
Dinner is typically eaten at around 5 or 6 pm each evening. But you might need to try different times until you find what works best for you. Just make sure not to eat too close to bedtime to not disrupt sleep patterns even more than they already have been disrupted by retirement life!

-Journal about how your day went before going off to bed with calm thoughts racing through your mind. T

The Good and Bad of Retiring Early

,
retire young

When it comes to retiring early, some of the benefits are obvious. You get to live your life without the constraints of work, and you are able to pursue your own interests. But there are other good reasons for retiring early, and there are some reasons why retiring early is not the greatest idea.

Your Dedication is Gone

One of the good reasons to retire early is that you are simply not dedicated to working anymore. When you are no longer emotionally interested in working, your performance deteriorates and your company suffers.  Working Took its Toll
In some professions, such as construction and law enforcement, the physical and emotional demands of the job can become too much over time. After a few years in a high-risk profession, your body and mind have simply had enough and it is time to go home and rest.

Your Finances Become More Flexible

Most people do not realize how expensive it is to work until they are no longer working. When you work any job, you incur expenses such as wear and tear on your car, transportation expenses such as gas or bus passes, work clothing costs, daycare and miscellaneous medical costs for work-related injuries. If you have planned your finances to allow yourself to retire early, then you will find that your money goes much further when you are not working.

Your Health Could Suffer

For some people, retiring early means abandoning the daily physical activity working required and giving up a big piece of their identity. Retiring early can cause physical and mental problems that could become very serious over time.

You Lose Your Social Circle

After years of working, you tend to take for granted the notion that you will see most of your friends at work five days out of the week. Even people who think that the people they work with are only acquaintances suddenly find that the loss of the social circle they developed at work is devastating.

You Didn’t Plan Well

When you retire before the age of 65, you run the risk of losing out on health insurance. Medicare automatically kicks in for every American when they turn 65, but what would you do until that age? Did you plan your retirement finances right, or will you run out of money? Many people forget to take inflation into account when they plan their retirement, and that makes retiring early financially dangerous.

There are two sides to every story, and that includes the story that goes with retiring early. The idea of walking away from work before the age of 65 can sound appealing, but there are plenty of variables to consider before you make that decision. If you do want to retire early, then talk about it with your family and ask your financial adviser if you have structured your savings properly to be able to live without a paycheck for the rest of your life.

Sources:
http://money.usnews.com/money/blogs/on-retirement/2015/02/05/6-reasons-you-shouldnt-retire-early

http://www.bankrate.com/finance/retirement/signs-ready-to-retire-early-1.aspx