Personal Finance, Retirement

Retirement Tips to Consider As You Make Your Plans For The Future

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If you search on the internet for “Retirement” you will get millions of findings. About 1,080,000,000 results on google came up for me. You need to be more specific on what you are looking for here. Most of us that are still in the planning phase of our retirement may need to learn more about how much it takes to retire or find a retirement calculator. Other will be looking for investment options or even places to live when they retire.

I recall seeing different options as I was entering the workforce than we have today. I did not choose to work for the government or a company that was unionized so most people like me did not get a option for  a pension plan. Most us have the option of a 401K or another type of employer savings plan, Social Security and other personal savings.

I spend a lot of time thinking about how much is enough to have and what will the best timing be. One thing I remember a very wealthy man telling me was that retirement should be decided by income, not by age. He felt that most people spend 40 hours a week for 45 years working so they can retire on about half what they had been earning or less. Seems right. Hopefully we can get our income where we need it to be to retire at an earlier age than 65 or 70.

CASH FLOW

I guess now, I am focused on creating as many different streams of income as I can to support me in the retirement years. In addition to the ones above I am focused on creating additional cash flow. This probably more important than having a home that is worth $500,000, because you can’t spend it. Cash flow is what is needed to support your daily living expenses. Sure you can take some of the earning from your various plans but if you take too much the principal balance diminishes and the earnings will be reducing instead of increasing. Not Good.

Tip #1-You should look into creating cash flow, not just savings.

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INFLATION EFFECTS

According to an article written by Richard Quinn, called “10 retirement lessons from a retired retirement pro” he gives us this lesson #5 from his list

“5. Inflation is real. For many people, health care spending, property taxes and rent will be the big inflation concerns. There’s no escaping inflation, so you need to plan. I would suggest having a pool of money that you leave untouched and allow to grow, until you need it later in retirement to offset increasing expenses.”

It certainly gets you thinking about how to offset for this doesn’t it? As our money sits in savings accounts that don’t earn enough interest to beat the inflation rate the actual purchasing power actually reduces over time.

Tip #2- Don’t forget the impact of inflation on things that we actually buy.

WALMART GREETER?

Some people joke about being a Walmart greeter after they retire because they will need to continue working in their retirement years. For some it is to continue to be productive and remain part of something. For others it is to add some needed income. I recall talking to a older guy I worked with. We were discussing when we would retire. He said “I’m never going to retire, I don’t want to sit in a rocking chair and do nothing for the rest of my life”. I thought that was odd actually, because I thought that retirement is when you get to do everything. I realized later on that he wanted to stay active and contribute to something. I think that his fear was of not being useful anymore. I can see now that he was not considering all the options. He was a skilled trade person who could teach others his skills. He could have taken on a business or even began another career after his main one ended. Many people are just working until they can no longer do it, due to health reasons.

Consider the options you may have as you consider retirement. You may be able to run a  business, be a consultant to the industry you worked in or work in another field entirely if you want. No one says it’s a requirement to retire into a rocking chair or anything.

Tip #3 Consider planning to work longer than your employer may want you to. Consider the options above or look into creating a passive income, that can continue to support your lifestyle.

In any case you need to think about what you are going to do. No decision, is still a decision and leaving it up to chance may not be the best method. If you need help from a profession planner make sure they are reputable and make an appointment.

Thanks for reading!

Mark Balderrama

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Twister sitting happy!

 

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