Are you at risk of running out of money after you retire?
People today are living much longer so they need to have a larger nest egg.
At one time, retirement was fairly straightforward. You worked for thirty years and received a pension. You purchased bonds in order to make your money last.
In your father’s time, life expectancy was shorter so many people lived for less than a decade after they retired. Today all that has changed.
Today, people who have worked for thirty years face the prospect of living for thirty years after retirement.
Financial planners advise retirees to set a budget for their retirement life and stick to it. Stuart Ritter, an investment expert, says that newly retired people who receive their retirement pension or 401(k) are overwhelmed by having so much money.
They need to think of this money as an income stream so they can understand how much they can really afford to spend. According to Ritter, how long your money will last depends on how much you have saved and how much you spend after you retire.
For many people, the best thing they can do is to keep working for several years in order to delay their retirement from the workforce. This will enable them to retire with more confidence.
Dana Anspach, author of a book on successful retirement, says she helps clients understand if they are facing the risk of not having enough money for their retirement. A young and healthy client needs to be prepared for a long retirement. The client also needs to have the discipline to follow a plan. She checks to see if clients can stick to a budget.
Anspach says that you need to stick to a plan, especially if you want to retire early.
If it appears that there will not be enough money in the nest egg to fund the retirement, other strategies can be used such as working for a longer period, taking on a part-time job, or getting Social Security later.
Anspach says that it is important to budget for items such as dental work and eye care. In many cases, parents also provide money to their adult children when they lose their jobs or get divorced.
When clients spend too much, Anspach tells them the choices they are facing. If they continue to spend too much, they will use up their money more quickly.
For a last resort, she will suggest getting a reverse mortgage or moving into a smaller place. Another plan can be moving in with a relative.
Ross Badger, an asset manager in London, says that those who are retiring should review all their expenditures.
He says that it is important to get out of debt. There may be automatic payments that go out each month for services that are no longer necessary. Badger says that many people have not done the work of looking at their financial numbers.
Badger says that many retirees are still taking on too much debt because of the pressure to buy a big house or take vacations. Some retirement money should be placed in the stock market in order to keep up with inflation.
Jonathan Matthews works for Debt legal as a senior debt advisor. He also wrote this article. Jonathan has first-hand experience in problems of this nature, and is one of the leaders in his field into helping people get out of debt.