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Things to Consider When Planning for Retirement

When you are retiring, you are essentially voluntarily choosing to be unemployed for an extended period of time, from the age of retirement up until you pass away. Because you are putting yourself in this stage of financial instability, there are several things that you need to consider in order to be able to enjoy your retirement and not have to worry so much about your money issues. Here are some factors to consider when you are planning for retirement.

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Your Various Expenses

When you are planning your retirement, one of the first things that you need to consider would be your expenses. There are several expenses that you have to account for. These include or involve your survival, any emergency or unexpected expenses, and your lifestyle. Fundamentally, your survival expenses are your basic needs. These include food and shelter, home expenses in terms of mortgage, rent, and repairs, clothing, internet and communications, and transportation, just to name a few. Essentially, anything that you need in order to survive, you will classify under survival expenses. From there, you need to consider your unexpected expenses that would include medical emergencies, sudden home or vehicle repairs that are not involved with day to day or even regular maintenance such as home damage from natural disasters, or collisions. These tie together with your necessary living, but are not expected. Additionally, when you retire, you will be living a certain lifestyle. This can translate to how you were living before retirement, or have to be altered after your changes in income. These are not paired with your day to day necessities, but extraneous expenses such as hobbies, travel, luxury clothing and entertainment. Factoring all of these together, you will be able to come to an understanding of the amount of money you will need to have saved up or access to in order to cover monthly or yearly expenses.

Income And Investments

In addition to expenses, your income amount will need to be heavily considered when you enter your retirement phase. This is going to be the key contributor and factor to determining if all your necessities, down to your extra expenses, are met. If the numbers and data do not align, you will need to reevaluate your finances. Income can and will come from various streams, depending on how you set yourself up before you retired. This could be fundamentally basic, from simply your savings that you have accumulated over the years, to streams of income that generate money even after you retire from your job. It is an advisable strategy that you have alternate sources of money and income to provide you financial security in your twilight years. Investing and generating a passive income is one of the most common and effective ways to ensure that you have money, but even if you were late to invest, or even if you haven’t invested when you were working, there is still time to generate money for various reasons and goals in mind. Consider how to invest during your retirement if you have not taken the steps to multiply your money while you were working, as this can provide you several benefits. If you retired rather early with a substantial amount of money, you may be able to ensure you are comfortable for years to come with properly invested assets. Even if you did save enough money for your own retirement, investing can give you generational wealth that you will be able to pass onto others when you are no longer around. Your income, along with your expenses, will be the biggest factors that you need to consider when planning for retirement.

Taxes And Liabilities

Other aspects that you need to consider when you are planning for retirement include taxes and liabilities. In addition to your basic expenses and income, you have to consider your taxes. This will be a fluctuating cost, depending on your income, so it is a separate variable expense that is going to fluctuate yearly that you need to incorporate within your balance sheets and planning. Other liabilities may be extra expenses that you do not need, perhaps having been present as expenses but can be removed with some management. Think about insurances on vehicles, phone and internet plans that have changed over time. These may tie in with basics or even lifestyle changes, but can be altered to save you some money. Accounting for these can help provide you more financial flexibility in your retirement years.

Having A Safety Net For The Unexpected

It is key that you have a financial safety net for whatever may occur in your life. As discussed, you may have expenses and emergencies, each with varying costs to your financial numbers. You want to consider having money aside in the event of a rainy day. If nothing happens for the month or the year, that safety net does not need to be added to, but simply maintained in case of emergency.

 

What You Would Like To Leave For Family And Children

Ultimately, when you retire, you might want to consider what you will be leaving those after you. Many people want to be able to leave something for their children or grandchildren, but if you are looking well past those generations, you want to consider building substantial wealth and assets. It is not limited to money either, but you may choose to leave property, stocks, businesses, or other assets for your family and their financial futures.

Retirement should be a time where you are enjoying yourself with your family and loved ones, not having to worry about work or money. This can be achieved through proper planning and preparedness. If you do not take the time to consider your future after retirement, you may have to reevaluate your finances, or even end up having to return to work in some cases. Be mindful of your money and begin thinking about retirement as early as possible to ensure that you are not stressing about it later in life.

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