3 Ways to Stay Financially Afloat During Retirement
Posted by Ocean Wealth
Running out of money during retirement. It’s something no one ever wants to think about. These are the golden years of your life when you should be enjoying time with family and friends, not worrying about where your next meal is going to come from. It’s a sad reality, but there are many people who experience severe financial struggles after leaving the workforce.
The reality of this is so bleak, in fact, that 61% of the Baby Boomer generation fears outliving their money more than their own death. Let the gravity of that statistic sink in for a second. There's something completely backward about people worrying more about money than their own mortality. Running out of money in retirement shouldn’t be such a source of anxiety and stress.
The good news is that you can avoid a disastrous post-retirement financial situation by simply planning ahead. Sitting down with a financial advisor far in advance of your retirement can help you stay ahead of any potential cash flow issues you may experience later on. Of course, being proactive with your retirement planning is always the best way to avoid a personal financial crisis. Knowing what to do if your money does run out, however, is also important.
Decrease Your Spending
A lot of people automatically assume their pension will allow them to live the exact same lifestyle they had as a worker. Unless you've been strategic and placed investments that'll help increase your income, your pension alone won’t cut it.
Because of that, you may need to make some lifestyle changes. That’s not to say you have to go completely minimalist and turn away materialism forever. It just means you have to move with a little more caution. For example, if you’re accustomed to eating out 4-5 times a week, you can reduce that number to 1-2 times a week. Focus on the little things that are driving your spending habits higher and adjust as needed.
There are still ways to do things you love without overspending. Identifying inexpensive hobbies that make you happy will be beneficial for your long-term retirement savings.
Consider a Side Hustle
Nobody wants to work in retirement. That said, it may be necessary for some additional income if you start running out of money.
With that in mind, there could be a side hustle that you’re passionate about which you can apply your skills to. It may come in the form of consulting work where you’re not in a full-time role, but you’re doing enough to make some money. There are many ways you can parlay a hobby or passion of yours into a money-making opportunity that doesn’t have to feel like work.
You might even find that you’re becoming quite successful with your side hustle with more time on your hands. Make sure you’re still enjoying your retirement and not putting in 40-hour weeks.
Don’t Run Out by Planning Ahead
This one sounds like a trick answer that we've already covered, but it’s the most important takeaway from this entire post. Retirement isn’t something you can jump into without a plan. The risk you take of retiring without a defined financial plan will automatically put you into a disadvantageous situation.
Start planning while you’re still working and speak to a financial advisor. They can help you invest your money in the right way, so you’re in a good position whenever you decide to retire. Being open and honest about what you want to do when you’re no longer working is critical. If you love to travel, tell your financial advisor, and they'll do their best to help you build a plan to save for your travel expenses later in life.
Our trusted team of advisors can help you make informed financial planning decisions to make sure you don’t run out of money during retirement. Contact us today!