Many people worry about going broke during their retirement. There are a lot of things that can happen during your retirement and the essential planning includes making sure that you were planning for risk, and assuming that something will happen during that time frame. We have outlined six different things that people should plan for, or at least try to make sure that they are ready. Working at managing your investments can help you avoid going broke by age 75.
Life expectancy beyond 75
It used to be that most of us would be dead by the time we reached age 75. Nowadays many people are living well beyond 80’s into their 90s. Most people need to plan that they will live beyond 75 and look at what the impact will be on their income and their savings during that time frame.
Avoid going broke by age 75
Live on income
Another factor that everyone should consider is learning how to live on the income that they bring in each year. Avoiding touching your principal will ensure that you have income each and every year well into your 90s. As soon as you touch the principal you Lower your income potential and make it more difficult to live on the reduced income that you are receiving.
Set a budget
Setting a budget is always a wise thing to do. Focus on the amount of income you have each month, and all of the major expenses that you will have each month and during the year. Make sure that you balance the budget, in other words make sure that your expenses are lower or equal to your income.
Avoid spending the principle
While your savings are invested, the savings are generating income at whatever rate that you are receiving for each individual investment. As soon as you sell that investment, the income stops and you will no longer have that investment as a source of income. If you depend on that income as part of your living expenses one should think very carefully before they sell any particular investment.
Health costs are another factor that many people do not calculate when they’re planning their retirement. They just assume that they will be healthy until they die and will not require treatment in hospitals or long-term care facilities.Long-term care facilities can cost upwards of $4000 per month meaning that your total cost will be $36,000 actually $48,000 per year. this is a huge sum of money for most people and if you’re living on a fixed income or one spouse must remain in the home it is very difficult to afford this kind of expense. Plan for your health care during your retirement.
There are always surprise costs that crop up during retirement. It may be a new car, it may be a new roof, it may be significant health costs such as dental or other health costs, but there will be something that comes along. Make sure that you have investments and savings are ready to deal with those surprise costs whatever they are.
Save enough in the first place
It maybe easy to say, save enough in the first place, however this is the crux of the problem for many people were facing retirement or are already in retirement. Work with a financial planner to figure out how much investment you need to have by the time you retire and have them figure out the amount of income that you need to meet the quality of life that you require during retirement. This is your life that you’re planning for and it is important to take responsibility and be accountable for the quality of life that you want to have while you are retired it could be as long as the third of your lifespan based on current living expectancy.
For more retirement planning ideas and posts, click here.