One of the many motivations for men and women in the workplace is knowing that they’ll eventually enjoy the fruits of their labor once they reach retirement. Instead of delaying retirement due to a lack of savings or investments, it’s important to plan ahead to ensure that you can live comfortably in your Golden Years. To remain financially stable once you retire, there are a few important steps to take to live comfortably and remain independent.
- Create a Spending Plan
Instead of just calculating the cost of the necessities when determining how much you need to live off of once retiring, it’s important to create a spending plan that allows you to live comfortably without feeling restricted financially. This should allow you to combine your savings with the Social Security benefits that you’ll receive in addition to any pensions and 401(k) funds. Set spending benchmarks to ensure that you don’t overspend once you’re retired to protect your savings and prevent it from dwindling too quickly.
- Develop a Distribution Strategy
Develop a smart plan on making withdrawals from your tax-deferred retirement plan. Each withdrawal will be taxed as income with a minimum amount that must be withdrawn at the age of 70.5 or you’ll suffer from high tax penalties. Many financial experts recommend waiting until you’re 70.5 to begin making withdrawals. In some cases, you can even be taxed less by taking out money before you’re 70.5 because you’ll be in a lower tax bracket since you aren’t receiving Social Security benefits yet.
Financial experts recommend downsizing your lifestyle during retirement to ensure that you live more comfortably and can get the most out of the Golden Years. Consider moving to a smaller house or condo, which will allow you to pay less with your mortgage and can cut down on the costs of maintenance and upkeep of the property. This can also lower your tax rates, the cost of utilities, and homeowner’s insurance. Downsizing can even allow you to afford to travel more or take on new hobbies without feeling financially strained with your lifestyle.
- Earn More Cash
Just because you become retired doesn’t mean that you can’t earn more cash on the side to continue living comfortably while staying busy. Consider substitute teaching, tutoring, pet sitting, or performing seasonal work to earn extra cash. Working part-time or for a season can allow you to enjoy your downtime more without becoming bored, while also remaining stimulated with activities that help you to give back to the community. This makes it easy to generate $1,000 to $2,000 each year with small jobs that won’t take away from enjoying your new life as a retiree.