Tips to stay retired after retirement
Financial stability and happiness should be top goals for retired life
As much as we’d love for retirement to be permanent, sometimes it just isn’t.
The reasons vary. Sometimes it’s because of lack of money. Sometimes because retirees become restless and choose to take on a new job or even a new career altogether.
In fact, more than half of retirees age 50 and older say they would return to the workforce if presented with a compelling opportunity, according to a recent RAND Corporation survey. This suggests that retirement might be a long-term process rather than a destination.
Here are a few tips that could help you retire and stay retired:
Retire with a purpose. Have the right reasons for choosing retirement instead of staying on the job. Retirement shouldn’t be an easy escape from an unsatisfying or boring career — it should be a reward for a lifetime of work. A common reason retirees say they go back to work is boredom, so think about how you’ll spend an average day as a retiree. Before you decide whether retirement is your best option, take a vacation and see how you’ll function with no job responsibilities, no company email and no work schedule. If the daily routine seems like more stress than reward, then retirement might not be in your plans just yet.
Consider pushing back the date. The best way to avoid having to lunge back into the working world is to delay retirement. Pushing back retirement also allows you to invest more income and let your savings build. Every day you work is one less day you’ll have to fund when you’re retired, and it gives you additional time to decide when the time really is right.
Invest for your needs. The common objective for younger investors is to get the best possible return. But once you retire, your needs change, and for most the priority is to generate income, preserve the capital you have, and gradually withdraw that capital for daily expenses. Building a variety of income streams can help keep retirement assets available for longer periods, which might allow you to live off the proceeds of the investments rather than relying solely on a draw-down option. As you choose retirement investments, think more about the safety net it provides rather than the potential appreciation of an asset.
Don’t take investment risks. Once you’ve decided to retire, gradually lower the amount of money you put into equity investments. Your ratio of stocks to bonds should decrease over time as you take a more conservative path, and that should lessen any potential blow that could come from a severe market decline. Consider other alternative investments, too, such as commodities and real estate. That kind of diversity can help protect your assets.
Make your cash work for you. It’s easy for retirees to find comfort knowing their nest egg sits safely in the hands of their nearest bank. The downside is that because of low interest rates, bank savings accounts yield very little interest. In fact, cash sitting idly in a checking or savings account could actually lose value because of inflation. To get the best deal, shop around for a bank that pays a higher interest rate on cash deposits. Many banks offer money market accounts with interest rates that are near the rate of inflation. And even though those banks might not have a branch near you, they’re still FDIC-insured, and you can still access your money from ATMs or online transfers. And be sure to consider online-only banks, too; they don’t have to pay overhead costs of multiple locations, so they sometimes can afford to pay a higher interest rate for their customers.
Take a frugal approach. To really make your retirement savings last longer, live modestly. Watch your bank and credit card accounts for recurring costs to eliminate. Before any purchase of non-essentials, consider whether it’s really needed or simply wanted. With your additional time in retirement, get creative with the items you already own. Not only is consuming less better for your finances, it also helps limit your footprint on the planet.
Find cheaper living. Sure, Florida is a retirement haven because of its year-long warmth, but it’s also attractive because it — like Tennessee — doesn’t have a state income tax. In fact, six states don’t have an income tax, and that tax-free option offers another avenue for retirees to avoid paying more to Uncle Sam each year. If you don’t live in one of those tax-free states, and you can’t bear the thought of relocating, consider downsizing to a smaller house — the result could be lower maintenance, lower utility bills and lower property taxes.
Find work that’s meaningful. Let’s say you’re eager to put work behind and happily head into retirement: You still might miss the camaraderie that comes from working with people who have similar interests and talents. Even a modest income can significantly help your finances, so for those who enjoy work, retirement offers a chance to begin a second career, whether full-time or part-time. If you have a business idea and financial gain isn’t a priority, work might not feel like work at all. Embarking on a second career or pursuing a passion to start a small business is a way to fight boredom and potentially add income.
If you have questions about retirement planning, please contact a representative at Kraft Asset Management LLC. We’ll be happy to discuss options.