Senior happy couple taking selfie on cruise ship travel at Barcelona harbour - Active retired people having fun
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What are you saving your money for?  What will you spend your money on in retirement? Will you make investments or cash in on investments and truly enjoy those golden years?  There are many considerations that will go into your retirement plan but it seems important to understand what you will have for retirement and how best to spend it. Factors that should be included in spending are basic cost of living, traveling, investments, supplemental income, and dependents. Retirees need enough money to live the lifestyle they choose for a set amount of time, but also need to understand that is finite, it cannot be taken into the next life.

Since money has no value in the afterlife, retirement finances need to calculate many factors but most importantly the basic necessities and the cost of living, with little to no actual employment income. By the retirement stage there are probably many accounts which can be drawn upon to cover monthly bills. Food, shelter, insurances, transportation, utilities and medical bills should fall into this category, and should also stay relatively consistent which makes it easier to budget for, for the next decade or two.

Housing will impact a large portion of a monthly budget. Maybe the mortgage is already paid and it’s just property taxes that need to be budgeted. Downsizing could be an opportunity to save money or spend less. Relocating can offer savings depending on where the move may lead, or maybe relocation offers closer proximity to family. Instead of relocating, maybe renovation and home improvements are more tangible. All these scenarios come with a price tag that range on all ends of the affordability spectrum.

While retirement signals aging and more regular medical appointments and perhaps rising medical costs, understanding that insurance is a necessity, it’s paying for the “what if?” Health and car insurances can be expected to rise. Life insurance premiums could get higher the more premiums are attained, but it may be worth considering taking the payout on any life insurance policies if you are looking to increase your available cash and you don’t have dependents requiring your support.

While maintaining a cost of living, of course leisure’s and pleasures will also need to be factored into financing the golden years.  Have you delayed large costly trips because of lack of time and circumstance, maybe these years will be designated for those higher priced trips and adventures, or maybe you take many less expensive trips over the course of retirement. Ted Jenkin, CEO of oXYGen Financial in Atlanta and author of The 21-Day Budget Cleanse urges, “Great experiences tend to bring far more happiness to retirees than accumulating lots of expensive stuff, if it’s between a Coach handbag and a great trip, go with the trip.” When traveling, consider less expensive destinations, travel during off peak times, or plan further in advance.

In addition to travel, seniors may join social groups that require membership or take on classes or hobbies that will require some financial investments, it’s important to allot for these expenses to maintain the desired quality of retirement. Marguerite Chueng, the chief executive officer of Blue Ocean Global Wealth, says, “that fitness is one of the biggest new expenses she sees her retired clients take on. . . It is often the fear of declining health as they age that motivates them to take fitness seriously.”

Many retirees have worked their entire lives not only saving but also investing for their future. The future is knocking and maybe it’s time to see where those investments can mature and be withdrawn on. Or maybe you have more assets then intended, consider making some low risk investments. Invest in yourself, you sure do deserve it.  In 27 Genius Things Retirees Should do with their Money Right Now, John Csiszar points out, “Certain things get harder as you age; it’s just the way it is. When you’re retired, your quality of life can be greatly improved if you spend some money on modern conveniences.”  Invest in your family and their flourishing future.

Withdrawing on investments can put more cash in your pocket, but maybe that is not quite enough to sustain retirement lifestyle, consider supplemental income with a part time job working from home or organizations that assist the community; not only would you be earning income you could be satisfying the simple need to be a productive contributor to society and some continued socialization. Examine investing in a rental property, John Csiszar concludes, “In addition to — or instead of — paying off your mortgage, investing in real estate can be a good move for retirees. If you buy rental properties, you can generate passive income every year from your renters. Additionally, the value of the property you buy might grow in value as well.” Maybe even consider turning a room of your own home into an Airbnb to generate some income.

Retirement is the time to kick back and enjoy what you have accomplished, even if a retiree decides to continue light work for self-satisfaction, it’s not to continue to support dependents that are capable of supporting themselves. Mark Hebner, founder, and president of Index Fund Advisors in Irvine, CA asserts, “Retirees should always prioritize their needs over their children’s. Although it is always the desire for parents to take care of their children, it should never come at the expense of their own needs while in retirement. Many parents don’t want to become a burden on their children in retirement, and ensuring their own financial success will make sure they maintain their independence.”  Seniors become more dependent in many differing aspects, whether it be by medical, social, or mental and emotional stabilities; continued financial support to dependents could interrupt success of living easy during those golden years.  JB Bryan, owner of JB Bryan Financial Group of Richmond, Va. assets, “If you indulge your grown son or daughter, your child will be less inclined to save and invest for retirement . . .You hurt your children by not showing them how to be financially independent.”  Tough love is always recommended here.

It’s not just about how retirement money is saved, but also how it intends to be spent. Retirees need to prepare for an unknown length of life after decades of hard work. Planning and knowing what to plan for can be beneficial in coming up with a successful retirement spending plan.

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