One of the most difficult things about planning for retirement is planning for the unknown. After working for 25, 30 or even 40 years, it may be hard to imagine what comes next. Many retirees actually do not have a plan for what they will do after retirement.
This not only refers to a lack of a financial plan, but also a lack of a plan for how they will spend their retirement years and can be the source of a tremendous amount of uncertainty and anxiety.
By taking simple steps in the years leading up to retirement, you can help to make sure that you enter your retirement years with clarity – excited and ready to take on the next phase of life.
Here are some suggestions of simple things you can do to help with retirement.
Tip #1: Manage Expectations
One of the first things you will want to do is when preparing for retirement is to manage your expectations and those of your family's as it relates to how you will handle your finances in your post-retirement years.
In order to be sure that your retirement nest egg lasts, it is best to mentally prepare yourself for the reduction in spending which usually accompanies retirement. Additionally, it is vitally important to manage the expectations of family.
After the 2008 economic meltdown, many adult children and grandchildren began to rely once again on parents and grandparents for economic support. If you plan to retire, you will need to put these kinds of responsibilities in perspective, calculating just how much help you can afford to give.
Notify your dependents of the new reality in time for them to make other arrangements, and stick to your decision.
Tip #2: Reduce Spending
It is extremely important to reduce your spending in the years leading up to retirement if you plan to live on a fixed income.
This would be a good time to start reducing the cable, internet and telephone bill by cutting out services you don’t really want, need or use. Keep a log of all the money you spend in a month and look for wasted money which could be saved.
Examples include eating out less, making your coffee at home instead of purchasing it, taking lunch to work, quitting smoking and reducing frivolous or impulse purchases (like that National Enquirer at the grocery store check out).
For those who are able, it would be good to seek a smaller residence now – complete with its lowered mortgage payment and lower utility bills (and less room for adult children to move into!)
Tip #3: Save Your Savings
Everyone knows that you should plan for retirement by maxing out your retirement account and making other wise investments.
Another great way to save for retirement is to adopt an old practice called save your savings. In the last section we advised that you reduce your spending. So, what do you do with the money you save?
Save it. Open a savings or investment account and put all the money you save by reducing spending into it. This may only amount to a few thousand dollars by the time you enter into retirement, but the discipline you develop by following this practice will serve you throughout your retirement years.
Tip #4: Avoid Making Major Purchases
The years leading up to retirement are probably not the ideal years to go out and purchase a larger home, a new car or an expensive time share.
In general, the years before retirement should be spent saving and adjusting your lifestyle down a few notches.
It may be tempting to go out and reward yourself for having completed so many years of dedicated work, but this is not the time for making large purchases.
Tip #5: Get Active
Back to the question: What will you do during your retirement years?
Many people go into this time period blindly, making vague promises to relax or volunteer. If you participate in any specific interests or hobbies, it would be a good idea to get involved in activities which interest you before you actually retire.
Have you always wanted to get in shape? Talk to your doctor and make a program.
Have you always wanted to learn how to paint or play the piano? Start now in your free time.
Do you wish to volunteer after retirement? Start now.
It would serve you far better to get involved with a new hobby or interest now, so that you can go into your retirement years with momentum.