The loss of a spouse is a profoundly emotional experience, compounded by a myriad of financial and life issues that require immediate attention. In an era marked by economic uncertainty and rising living costs, surviving spouses face unique financial challenges. This article explores some common financial issues that surviving spouses may encounter and offers insights on how to manage them effectively.

Change in Social Security Benefits

One of the most significant financial changes for surviving spouses is the alteration in Social Security benefits. Couples typically receive two Social Security payments each month. However, after one spouse passes away, the survivor is left with either their own benefit or the survivor’s benefit, whichever is higher. This reduction in income can strain the surviving spouse’s budget, as many fixed expenses, such as mortgage or rent, utilities, and transportation costs, remain unchanged.

To mitigate the impact of this change, it’s crucial to have savings and other financial plans in place. Immediate actions include notifying the Social Security Administration of the death to ensure the timely adjustment of benefits. Surviving spouses should also consider whether the survivor’s benefit is larger than their own full benefit and plan accordingly. For those supporting minor children or disabled dependents, applying for survivor benefits promptly is essential since benefits are not retroactive to the date of death but start from the application date.

Drop in Overall Income

The death of a working spouse can lead to a significant drop in household income, potentially necessitating the surviving spouse to re-enter the workforce. This situation is particularly challenging for older adults who may have been out of the job market for years or have health issues. For example, if a corporate executive passes away, their spouse may struggle to find employment that matches the previous income level.

To prepare for this possibility, couples should consider building a robust emergency fund and exploring part-time work or freelance opportunities that align with the surviving spouse’s skills and health.

The Pension Factor

Pension benefits can provide financial stability during retirement, but the death of the pension recipient can reduce or eliminate these payments. Many pension plans offer survivor benefits, typically around half of the original benefit, but not all plans do. Surviving spouses need to understand their entitlements and adjust their financial plans accordingly. Reviewing pension plan details and considering life insurance to supplement lost income can provide additional security.

Income Taxes

Surviving spouses may experience changes in their tax liabilities. For instance, a widow might find that her reduced income places her in a lower tax bracket, or she may qualify for certain tax deductions that she didn’t before. However, the change in filing status—from joint to single or head of household—can result in a lower standard deduction and potentially higher tax rates.

Understanding the tax implications of widowhood is crucial. Surviving spouses should consider consulting a tax professional to optimize their tax situation and take advantage of any available deductions and credits.

Estate Planning Considerations

Efficient estate planning can ease the transition for surviving spouses. Having 15 to 20 certified copies of the death certificate can facilitate the retitling of accounts and the collection of life insurance benefits and retirement plan funds. Detailed records of communications with former employers, the Social Security Administration, and financial institutions ensure that all necessary steps are taken promptly.

Bill Payment and Financial Organization

If the deceased spouse managed the household bills, the surviving spouse must quickly become familiar with the financial responsibilities. Organizing bills, gaining access to online accounts, and setting up a reliable system for tracking payments are essential steps. Ensuring access to the deceased’s email and online accounts can prevent missed payments and additional financial stress.

Life Insurance

Life insurance proceeds can provide crucial financial support for surviving spouses. It’s important to contact the life insurance company promptly, providing the necessary documentation, such as the death certificate and policy number. While insurance companies may offer low-interest cash accounts for the proceeds, transferring the funds to a higher-yielding account may be more beneficial.

Be Alert for Scams

Surviving spouses are vulnerable to scams and fraudulent claims, especially during the probate process. Scammers may attempt to collect on non-existent debts or services. Reviewing debts and obligations with the deceased spouse and maintaining vigilance against fraud can protect survivors from financial exploitation.

Companionship and Loneliness

Beyond financial concerns, surviving spouses often face emotional challenges, including loneliness and isolation. This can lead to adverse health outcomes, such as depression or substance abuse. Support from family, friends, and professional counselors is vital. Group therapy and social activities can provide emotional support and help mitigate the loneliness that often accompanies the loss of a spouse.

Final Thoughts on Planning for Survivorship

Preparing for the financial impact of losing a spouse is an essential aspect of retirement planning. Creating a comprehensive financial plan, building a support network, and consulting with financial advisors can help surviving spouses navigate this difficult period. The steps taken today can make a significant difference in ensuring financial stability and emotional well-being in the future.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post Common Financial Issues for Surviving Spouses first appeared on SafeMoney.com.

Retirement is a significant phase in life, often marked by mixed emotions: excitement for the years ahead and uncertainty about financial security. Many people have some form of retirement plan in place, whether through personal savings, an employer-sponsored plan, or a combination of both. But with changing market conditions, evolving retirement needs, and increasing lifespans, it’s critical to ensure your retirement plan is robust and aligned with your long-term goals. Seeking a second opinion on your retirement plan can be a prudent step to ensure you’re on the right track.

Common Retirement Planning Challenges

Retirement planning can be complicated, and even the most carefully considered strategies can have blind spots. Here are some common challenges:

• • Underestimating Longevity: Many people outlive their life expectancy predictions, and not having enough savings can lead to financial difficulties.
  • Healthcare Costs: Healthcare expenses tend to rise with age. Not accounting for unexpected medical bills can put a strain on your savings.
  • Inflation: A plan that doesn’t consider inflation might leave you with significantly less purchasing power.
  • Market Risks: Investment risks, particularly with volatile markets, can impact portfolios and retirement income.
  • Estate Planning: Many overlook estate planning, potentially leaving loved ones with complex and expensive inheritance issues.

Benefits of a Second Opinion

Getting a second opinion on your retirement plan offers numerous advantages:

• Uncovering Gaps: A different financial advisor can identify potential gaps or weaknesses in your current plan that you might have missed.
• Fresh Perspective: A second advisor may offer fresh ideas and strategies to optimize your savings, reduce risks, or take advantage of tax-saving opportunities.
• Validation: If you’re confident in your plan, a second opinion can provide validation that you’re on the right track.
• Enhancing Strategy: Recommendations from a new advisor might complement or enhance your existing strategy, ensuring better financial health.

When to Seek a Second Opinion

It’s a good idea to consider a second opinion in the following scenarios:

• Significant Life Changes: Major life events, like downsizing your home, starting a new business, or making a substantial investment, should prompt a review.
• Uncertain Recommendations: If your advisor’s suggestions seem unclear or inconsistent with your goals, it might be time to consult another professional.
• Lack of Confidence: If you’re not fully confident in your plan, a second opinion can provide reassurance or adjustments.

What to Expect from a Second Opinion

A second opinion typically involves a thorough review of your financial situation and retirement goals:

• Assessment Process: The advisor will evaluate your income streams, portfolio risk, insurance policies, estate plans, and other assets to identify gaps or risks.
• Personalized Recommendations: Based on the assessment, the advisor will recommend adjustments that better align your plan with your objectives.
• Actionable Strategies: The advisor may suggest specific strategies, like diversifying your investments or optimizing Social Security benefits.
• Risk Mitigation: They’ll help mitigate risks, such as market volatility or long-term care costs, that could affect your retirement.

Choosing the Right Financial Advisor for a Second Opinion

Selecting the right financial advisor is crucial. Here’s how to find one who aligns with your needs:

• Credentials and Experience: Verify the advisor’s credentials, ensuring they’re certified and experienced in retirement planning.
• Potential Conflicts of Interest: Advisors who don’t adhere to a fiduciary standard may not be obligated to prioritize your interests above their own. Look for advisors who are legally required to provide unbiased, client-focused advice.
• Transparent Fees: Understand their fee structure to avoid hidden costs that could eat into your savings.
• Communication Style: The advisor should communicate clearly and listen to your needs, providing personalized advice rather than one-size-fits-all solutions.

Conclusion
Seeking a second opinion on your retirement plan can be a game-changer in securing your financial future. With the complexities of retirement planning and the challenges that arise over time, a fresh perspective can uncover blind spots, validate your existing plan, or enhance it with new strategies. Make sure to choose a trustworthy advisor who will carefully analyze your financial situation and provide personalized guidance. Taking this proactive step can offer peace of mind and ensure a comfortable and secure retirement ahead.

If you’re seeking tailored guidance, consider consulting a financial professional. Visit our “Find a Financial Professional” section to connect directly. For a personal referral to an independent, licensed advisor, call us at 877.476.9723 or contact us here to book your first appointment.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post Get a Second Opinion on Your Retirement Plan first appeared on SafeMoney.com.

Introduction to Managing Healthcare Costs

As you approach retirement, you hope to enjoy your time without stress. However, high healthcare costs can quickly deplete your savings. Therefore, it’s crucial to include these expenses in your retirement planning. Annuities offer a reliable solution by providing a steady income to cover healthcare needs.

Understanding Medicare

For most Americans over 65, Medicare serves as the primary health insurance. It provides substantial support but does not cover everything. Notably, Medicare excludes services such as dental, vision, and hearing care. It also involves co-pays and deductibles. Consequently, some retirees opt for additional insurance like Medigap or Medicare Advantage to fill these gaps, although these plans come with additional costs.

Why Annuities Help

Annuities are particularly effective for managing medical expenses in retirement. By converting some of your savings into regular payments, annuities ensure that you always have funds available to meet medical costs.

Consistent Money
One of the key benefits of an annuity is that it delivers a consistent monthly income for life. This reliability is invaluable as it allows you to manage your budget more effectively. With this steady income, you can comfortably handle regular medical expenses and unexpected health issues alike.

Protecting Your Future

As you age, it is common for healthcare costs to increase. Annuities offer a form of protection against the risk of depleting your resources, ensuring you continue to receive income throughout your later years, which is often when you need it most for healthcare.

Growing Your Money
Additionally, some annuities have the potential to grow based on stock market performance. This growth can be crucial in years when the market performs well, providing extra funds that can help cover unexpected healthcare expenses.

Tax Benefits
Moreover, annuities provide significant tax advantages. The investment within an annuity accumulates tax-deferred, meaning you don’t pay taxes on the earnings until you withdraw the funds. This arrangement allows your money to grow more efficiently and increases the amount available for healthcare when required.

How to Use Annuities for Healthcare Costs

To effectively incorporate annuities into your healthcare financial strategy, consider the following steps:

• Assess Your Health Needs: Firstly, evaluate your current health and potential future needs. Take into account your family health history and any existing conditions.
• Review Your Savings: Next, examine your total savings and income sources. This review will help you determine how much you can allocate towards healthcare expenses.
• Consult with Experts: Additionally, speak with financial advisors who specialize in retirement and healthcare planning. They can provide valuable insights into choosing the right annuity for your situation.
• Select the Best Annuity: Choose an annuity that aligns with your financial goals and risk tolerance. There are various types of annuities available, so select one that best meets your needs.
• Monitor and Adjust Your Plan: Finally, it’s important to regularly review your annuity’s performance and your overall financial plan. Make adjustments as necessary to ensure it continues to meet your healthcare needs.

Conclusion
Managing healthcare costs effectively is crucial for a secure and stress-free retirement. Given the rising costs and limitations of Medicare, having a solid financial strategy is essential. Annuities provide a dependable way to ensure a continuous income throughout retirement. By planning carefully and incorporating annuities into your financial planning, you can safeguard your financial future and enjoy your retirement years without the burden of healthcare worries. This proactive approach ensures you are prepared for unexpected costs and offers peace of mind as you age.

Looking for Guidance?

If you’re seeking personalized advice, consider reaching out to a financial professional.. Get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly. If you would like a personal referral for a first appointment, please call us at 877.476.9723 of contact us here to schedule an appointment with an independent trusted and licensed financial professional.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post Managing Healthcare Costs in Retirement first appeared on SafeMoney.com.

Navigating the path to a secure retirement can seem daunting. With numerous investment options, economic volatility, and increasing life expectancies, understanding how to effectively manage your retirement accounts is crucial. Diversifying these accounts is not just wise—it’s necessary. It ensures financial stability and sets you up for a comfortable retirement.

Why Diversification Is Key

Diversification stands as the cornerstone of sound financial planning. It involves spreading your investments across various assets to minimize risk. In retirement planning, this means allocating your savings across different types of retirement accounts. Each type offers unique tax advantages and withdrawal implications. Through diversification, you reduce risk and enhance your potential financial returns.

Understanding Different Retirement Accounts

Effective diversification starts with knowing the different types of retirement accounts available:

• Traditional IRA and 401(k): These accounts feature tax-deferred growth. You pay taxes on withdrawals during retirement, potentially at a lower rate.
• Roth IRA and Roth 401(k): You make contributions with after-tax income. This setup provides tax-free withdrawals under certain conditions, benefiting those expecting higher tax rates in retirement.
• SEP IRA and Solo 401(k): Best for self-employed individuals or small business owners, these accounts allow for larger contributions, ideal for those who may start saving for retirement later or who have fluctuating incomes.

Recognizing the specifics of each account type is the first step in crafting a tailored retirement plan that fits your financial situation and goals.

Balancing Tax-Advantaged Growth

A crucial aspect of retirement planning is balancing immediate tax benefits against future tax savings. The principle of tax-deferred triple compounding plays a vital role here. This powerful mechanism boosts your investments in three significant ways:

• Investment returns: Earnings generate further earnings through reinvestment.
• Principal growth: Funds grow without current tax deductions, allowing more of your money to compound.
• Tax savings: The money you save by not paying taxes annually also compounds, providing even greater growth potential.

Leveraging this compounding effect in tax-deferred accounts like traditional IRAs and 401(k)s can dramatically increase your retirement savings.

Incorporating Annuities for Guaranteed Income
Annuities often get overlooked in retirement planning, yet they offer valuable benefits. Fixed annuities, for instance, provide a steady, predictable income that does not depend on market conditions. This feature is crucial for maintaining financial stability and peace of mind, complementing withdrawals from other retirement accounts.

Regular Reviews and Adjustments
Life is unpredictable, and so are financial markets. Regularly reviewing and adjusting your retirement plan is essential. Changes in economic conditions, personal goals, or lifestyle choices might necessitate adjustments in how you balance investments among different accounts, modify contributions, or even rethink your overall retirement objectives.

Seeking Professional Guidance
The complexities of retirement planning can be overwhelming due to intricate tax implications and regulatory considerations. Consulting with a financial advisor can provide immense benefits. They offer personalized advice that considers your entire financial landscape, helping you make well-informed decisions that enhance your retirement preparedness.

Maximizing Contributions and Utilizing Catch-Up Provisions
To fully benefit from your retirement accounts, it’s crucial to maximize your contributions up to the legal limits. For individuals nearing retirement age, taking advantage of catch-up contributions is particularly advantageous. These provisions allow people over 50 to contribute extra funds to their retirement accounts, accelerating the growth of their nest egg during the critical years before retirement.

New Topics for Comprehensive Retirement Planning

Managing Inflation Impact
Inflation can significantly erode the purchasing power of your retirement savings. Investing in assets like Treasury Inflation-Protected Securities (TIPS) or real estate can help mitigate this risk. These investments often outpace inflation, preserving the value of your savings.

Planning for Healthcare Costs
Healthcare costs typically rise as you age. Planning for these expenses, including Medicare, supplemental insurance, and potential out-of-pocket costs, is crucial. This ensures you are financially prepared for health-related needs without compromising your retirement savings.

Understanding Social Security Benefits
Social Security benefits can complement other retirement income streams. Maximizing these benefits involves understanding the best time to claim them based on your financial situation. This can significantly affect your retirement income and requires careful planning.

Estate Planning and Will Preparation
Preparing a comprehensive estate plan, including wills, trusts, and powers of attorney, ensures your assets are distributed according to your wishes. This planning can also help minimize the tax burden on your heirs, ensuring they benefit fully from your legacy.

Addressing Psychological Aspects of Retirement
Adjusting to retirement can be challenging. It often involves changes in daily routines and identity. Planning for this transition can help you find new purposes and maintain your well-being in retirement.

Housing Options in Retirement
Choosing the right retirement housing, whether downsizing, moving to a retirement community, or exploring assisted living facilities, impacts your retirement planning and expenses. Each option has financial implications that need consideration.

Leveraging Technology in Retirement Planning
Modern technology aids in retirement planning through tools like online calculators, financial management apps, and investment tracking platforms. These resources can simplify managing your finances and help you stay informed about your investments.

Conclusion: Charting a Path Forward
Building a comprehensive retirement strategy involves more than spreading investments across various accounts. It requires creating a plan that adapts to both economic and personal changes. With careful planning and strategic investment, achieving a secure, financially stable retirement is within your reach. Remember, the most effective approach is customized to your unique financial needs and focused on long-term success.

Looking for Guidance?

If you’re seeking personalized advice, consider reaching out to a financial professional.. Get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly. If you would like a personal referral for a first appointment, please call us at 877.476.9723 of contact us here to schedule an appointment with an independent trusted and licensed financial professional.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post Mastering Retirement Account Diversification first appeared on SafeMoney.com.

In an era where medical advancements and healthier lifestyles are pushing life expectancies ever higher, the challenge of ensuring that your wealth lasts as long as you do has become increasingly critical. For many, the solution lies in a financial instrument that is both ancient and misunderstood: the annuity.

Understanding the Longevity Risk

The joy of a longer life comes with the concern of outliving one’s savings. With retirement periods extending beyond the 20 or 30 years that past generations planned for, the risk of depleting one’s nest egg is real. Traditional retirement savings accounts, like 401(k)s and IRAs, are subject to market volatility and withdrawal rates that can make them unreliable as sole sources of retirement income.

The Role of Annuities

Annuities present a strategic solution to this longevity risk. By definition, an annuity is a contract with an insurance company that, in exchange for a lump sum payment or a series of payments, promises to pay you a regular income for either a fixed period or for your lifetime. This feature makes annuities a crucial tool in retirement planning, providing a steady income stream that can complement other retirement funds.

Types of Annuities and Their Benefits

Annuities come in various forms, each with its own set of features designed to meet different financial needs and objectives:

• Fixed Annuities offer a guaranteed interest rate and a predictable, steady payout, making them a safe choice for conservative investors.
• Variable Annuities allow for investment in the stock market, offering the potential for higher returns (and higher risk).
• Indexed Annuities provide returns based on a stock market index but with certain protections against market downturns.

Incorporating Annuities into Your Retirement Strategy

To effectively use annuities in mitigating longevity risk, it’s crucial to:

Assess your financial situation and retirement goals. Consider your current age, expected retirement age, health status, and financial needs.

Determine the right type of annuity. Evaluate which annuity type aligns best with your risk tolerance and financial objectives.

Consider the timing of annuity purchases. Deciding when to buy an annuity can impact the benefits you receive, with options ranging from immediate annuities that start paying out soon after purchase to deferred annuities that begin payments later in life.

Annuities and Estate Planning

Annuities can also play a role in estate planning. Certain types of annuities allow for the continuation of payments to a spouse or beneficiaries, ensuring that your loved ones are provided for in your absence.

Challenges and Considerations

While annuities offer significant benefits, they are not without their drawbacks. Fees, surrender charges, and the complexity of some annuity products can be deterrents. Additionally, the guaranteed income of an annuity comes at the cost of less access to your principal in case of unexpected financial needs.

Considering an annuity as part of your retirement plan? Speak with a trusted independent financial professional to explore how annuities can fit into your comprehensive financial strategy, ensuring a stable and secure future for yourself and your loved ones.

Navigating the Complex World of Annuities with a Financial Professional

When considering the integration of annuities into your retirement strategy, recognizing the importance of partnering with an independent financial professional cannot be overstated. Annuities can indeed form a crucial part of your retirement income, offering a buffer against longevity risk with their guaranteed income. However, the landscape of annuity products is diverse and complex, marked by variations in costs, fees, and terms across different offerings and providers. This variability underscores the critical need for expert guidance.

An independent financial professional brings to the table a wealth of knowledge and experience in assessing the wide range of options available, ensuring that the annuity selected aligns seamlessly with the broader contours of your retirement plan. This involves a holistic assessment of your financial landscape, including other income sources, liquidity needs, and long-term financial objectives. The intricacies of annuity contracts—ranging from fee structures to benefit options and riders—demand a nuanced understanding to navigate effectively.

Working with an independent financial professional also provides the opportunity for personalized advice tailored to your unique financial situation. They can help decipher the complex language of annuity contracts and interpret how different annuity features might play out in various market conditions or personal circumstances. Moreover, an independent financial professional can offer insights into how an annuity fits within the context of your overall retirement portfolio, balancing it against other investments to achieve a diversified and robust financial plan.

The decision to incorporate an annuity into your retirement income strategy is significant and requires careful consideration. The right independent financial professional not only aids in selecting the most suitable annuity product but also ensures that this decision is integrated thoughtfully within your comprehensive retirement planning. This partnership is invaluable for navigating the complexities of annuities, making informed decisions, and ultimately securing a stable and confident financial future in retirement.

Conclusion
As we face the prospect of longer lives, the importance of planning for financial longevity becomes ever more critical. Annuities, with their promise of lifetime income, offer a powerful tool to mitigate the risk of outliving your wealth. By carefully considering your financial situation, understanding the different types of annuities, and consulting with a financial advisor, you can develop a strategy that ensures your wealth lasts as long as your life.

If you are looking for someone to help you, many independent financial professionals are available here at SafeMoney.com. Get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly. If you would like a personal referral for a first appointment, please call us at 877.476.9723.

The post Your Wealth: Financial Strategies for a Longer Life first appeared on SafeMoney.com.

Now, before you break out the party hats and leave the workplace hustle, make sure that your plan is ready to go. Retirement planning isn’t all about money, although that is a big part of it. Your financial plan should also spell out how you will make the most of your newfound free time. Whether you want to travel, spend time with loved ones, pursue hobbies, relax at your leisure, or do something else, your retirement plan will serve as a roadmap and GPS for keeping things on track.

Here are 20 questions to help ensure you have your retirement ducks in a row. From finances to lifestyle, you can use these questions to frame your overall goals and expectations for your golden years. You have worked hard to reach this point. Now is the time to confirm that you have everything you need to enjoy it fully.

Questions for Retirement Planning

Let’s dive into these 20 questions that will help you navigate that long-anticipated journey into retirement!

1. Will you have enough money for retirement?

Money, money, money. It’s the fuel that keeps your retirement vehicle going. Before you say goodbye to your career, take a good look at your savings, retirement accounts, and investments. Will they be enough to pay for your dream retirement?

If not, you might look at ways to keep working and saving more to reach your goal. Or you might align your goals for retirement more with your current financial situation. No matter what, it’s good to take some time to evaluate this before making any decisions. The follow-up questions that build on this can help bring clarity.

2. What will your lifestyle be in retirement?

Everyone has a certain vision of what they would like for their retirement to be. What does yours look like? Will you travel the world? Venture from state park to state park? Volunteering or enjoying a hobby that you have long favored? Or simply spending some lazy days at home?

If you have a spouse or partner, what are their expectations of retirement? It’s good to have a conversation about their goals for retirement, the timing for that, and what they would like to do. If how you spend your time has been pretty independent until this point, you might talk about how to mesh your lifestyles together. The bottom line? Knowing what you want out of retirement will help you tailor your financial plan to fit your desired lifestyle, like a perfectly tailored suit.

3. Do you want to work in retirement? What will that be like?

Retirement doesn’t have to mean a complete departure from the workforce. Some folks want to stay engaged with part-time work or pursue passion projects. Maybe it’s hard to say goodbye to your specific work that brought you joy and satisfaction. Of course, you might also be up for something different from what you did in your career.

Do you want to start your own business? Pursue consulting opportunities where others can benefit from your knowledge and experience? Stay active in job roles that you had, but in a part-time capacity? Retire for a bit and then unretire? There are many ways in which you can keep a toe in the working world. It’s a matter of deciding whether you still want to work (or if, financially speaking, if you have to), and what type of work would be fulfilling for you.

You can talk to friends and acquaintances that know you about opportunities and things to think about. They can give you feedback based on your skill set and what they know you enjoy (and don’t as much).

4. What are your income needs?

Crunch those numbers! In retirement, income is the most crucial outcome. You have to replace the income that you earned from your career somehow. You have your lifestyle in mind. Now, how much will it cost to fund your desired quality of life in retirement?

Calculate how much income you will need to cover your expenses. First, start with breaking down your expenses into monthly living expenses and non-essential spending. Then, factor in everything, from housing, healthcare, and insurance to leisure activities, entertainment, and charitable goals. Run your income projections for at least a 30-year span. Don’t forget to include inflation, which can be as simple as increasing your expected spending by 2-3% per year.

Knowing your income needs will help you create a solid financial plan for the future. A well-thought-out plan will also give you room to be flexible and adapt if changes are needed over time. Secure tomorrows start today, so carving out time to know your retirement numbers will pay off.

5. How will you spend time in retirement?

Retirement isn’t just about the Benjamins; it’s also about how you will fill your days. Think about the activities and hobbies that bring you joy and fulfillment. Whether it’s traveling, volunteering, or mastering something like scuba diving, having a plan for your time can make retirement that much sweeter.

If you have a general idea of how you would like to spend your time, but not quite so much of a hold on what your weekly schedule might look like, invest some time there, too. Will you want to do anything with your spouse? Will you continue working in some capacity as we discussed earlier? Do you anticipate that you will be spending a lot of time where you live, or will you be on the road for some time with travel?

It’s also good to think about what you would like to do in early retirement versus later years. Some split retirement into three phases: go-go, slow-go, and no-go years. The go-go years are when people’s energy and physical health tend to be strong. So, at that point, they do those long-held goals that will be hard to get around to in later years.

If you aren’t sure about what you would like to pursue, test-drive different possibilities! Try out a particular activity or a certain lifestyle aspect for a week, see how it goes, and evaluate whether you like it. This can be a great way to see how you will enjoy spending your free time in retirement.

6. What will your major sources of retirement income be?

You have a sense of what your income and spending needs will be. From where will you get the money? Social Security? Do you have a pension? Will you count largely on your investments?

Take stock of your primary sources of retirement income. Start with Social Security. According to the Social Security Administration, your benefits payouts are intended to replace 40% of your career income. Of course, that might not apply to everyone. Either way, you still have an income gap to cover.

Depending on how much you have in retirement investments and savings, you can use a variety of withdrawal strategies to ensure your income lasts. If the risk of outliving your money concerns you, you can turn to lifetime income-generating vehicles including annuities to make sure your cash-flow doesn’t run empty. Again, it’s about filling the gap and making sure that your income lasts as long as you need it to.

7. When will you take Social Security, and why?

In many respects, Social Security is the golden ticket of retirement income. But when should you start your benefits? There is no one-size-fits-all answer for everyone, but if you would like to receive 100% of your benefit payout, consider waiting until full retirement age. And if you would your payouts to be bigger and you can wait, delaying until age 70 can let your benefit accrue another 32% roughly.

When does it make sense to claim early or wait? Consider factors like your health, life expectancy, family history, and financial needs when deciding the right time for you. An experienced, retirement-knowledgeable financial professional can also map out different ages for taking Social Security for you – and let you see what those look like.

8. What about risk with your retirement investments?

Risk – it’s a four-letter word that can be a “dealbreaker” for financial security in retirement. When you are in the span of 10 years before and in early retirement, you are in what we call the “retirement risk zone.”

Investment losses during this period can be hard to bounce back from, and if you are taking out money for withdrawals, those losses compound. You might even have to change your long-term goals if you suffer steep losses at the wrong time. 

On the other hand, you also don’t want to take too little risk, especially if you were behind on saving for retirement, and your investments need to perform well. So, take some time to assess your risk tolerance and also the level of risk in your asset holdings. Does it align with your comfort level? Do you need to take less or more risk?

Generally, the more we move into our retirement years, the more we should put the brakes on investment loss risk. However, this will be different for every person depending on their personal situation, tolerance for risk, financial timeline, and more. The bottom line – it’s all about finding that sweet spot between growth and security.

9. What are your spouse’s or partner’s goals?

Retirement isn’t about flying solo. It’s a team effort. Sit down with your spouse or partner and discuss your retirement goals and aspirations. Understanding each other’s priorities can help you create a retirement plan that works for both of you.

In particular, you may want to talk about how you will spend your free time, if you both have been independent until now. What activities do you enjoy together? What activities do you like to do individually? If you both are independent, how will both of your schedules jive in retirement? Would your spouse like to continue working, and what will that look like? Will their choices affect your retirement goals? These are good questions to consider.

10. How is your health, and what will it look like in retirement?

As the old saying goes, “health is wealth.” Especially in retirement! Take stock of your current health and consider how it might change as you age. It’s also good to think about other factors that can come into play.

To what ages did your parents live? May you face the prospect of a long-time retirement? Or do you expect a shorter retirement span? If they loved for a long time, that means that you may have more years of retirement income to plan for.

Did your parents have any medical conditions that may be prudent to consider? For example, while it’s not a pleasant topic, parental history of heart disease, cancer, dementia, Alzheimer’s, or other conditions is good to think about for health possibilities in your future.

That being said, medical and wellness advances have moved the needle in healthcare. While our family history may be a clue-in to what our future health looks like, it’s no longer sure destiny. You may live longer than you think with those healthcare gains. If you are also mindful about your personal wellness before and in retirement, your health expenses will likely be lower than what they could have been.

And of course, don’t forget to include potential healthcare costs and long-term care needs when planning for retirement.

11. What will your relationships with loved ones, friends, and others be in retirement?

Retirement is a time for nurturing relationships and creating lasting memories. Consider how your relationships with loved ones might evolve in retirement. How will you go through life changes together?

Does your family live near you, or are they some distance away? Do you plan to visit them more frequently? Would you consider moving to be closer to them?

How is your social circle of friends? Do you want to make new friends and peers who are within your age range and have similar interests? How will you seek those opportunities out? Consider possibilities with friends from your workplace, people in your faith community (if you have one), health and well-being groups, social meetups that share your personal interests, causes or organizations that matter to you, and similar groups.

No matter what, prioritizing relationships can enrich your retirement years. Making them a top goal can help bring new, exciting potential and enjoyment to your lifestyle.

12. How will you deal with unexpected financial or life emergencies?

Life is unpredictable, especially in retirement. Prepare for the unexpected by building an emergency fund and having a solid contingency plan in place. Whether it’s a sudden health crisis or a market downturn, having a financial safety net can help you weather the storms of life with confidence.

You can talk to a financial professional for guidance on what a solid emergency fund would look like for you. (More on finding the right financial professional later.)

13. How will inflation affect your retirement finances?

Ah, inflation, a.k.a. the silent thief of retirement income. Inflation is one of a few things that you can’t control, and it does take its toll over time. How will you take heed of the impact of inflation on your money’s purchasing power?

Nothing is ironclad, but you can make a variety of moves to combat the rising cost of living and make your retirement dollars count. First, take inflation into account when planning for retirement. When you have your long-term income and spending projections (again, at least 30 years’ worth, ideally), have your spending rise by 2-3% per year. That is what historical inflation has averaged out to be over the past few decades. It can give an idea of how much money you might need with an increasing cost of living.

As for having inflation-adjusting strategies as part of your overall retirement plan, you can choose from a variety of options. Inflation-protected securities, such as TIPs, can help your money keep up its purchasing power. If having an assured monthly income will bring peace of mind, an annuity can set a floor of guaranteed income that is unchanging. That will pay a baseline income. Then the rest of your assets could be in market-based investments that grow at a pace that keeps up with inflation.

Other options include laddering bonds, CDs, or other financial products used in a diversified fixed-income strategy.

14. What will your plans be if you outlive your retirement money?

Outliving your retirement savings is a fear many retirees face. Some surveys show that people fear running out of money more than public speaking or even death. You can beat back this risk by exploring options like annuities to provide a steady stream of income in your later years.

Another risk is that long-term care and high-cost healthcare will drain your retirement assets. Long-term care insurance, life insurance with living benefits, and other insurance products might be something to look into before you get into later retirement. These options can pay multiples in benefits for each dollar of premium that you put into them.

If you do wind up outliving your money, make a contingency plan in advance. Will you live with adult children? What will that look like, and how will they support you? If that isn’t an option, could you live with close friends? What would living arrangements be? Then take some time to discuss with your family or friends what that might look like, although it’s probably an uncomfortable topic.

The bottom line is that planning for longevity in advance can help you be ready for what lies ahead.

15. What is your plan for taxes in retirement?

Taxes don’t magically disappear in retirement. In fact, they might even increase depending on your income. Develop a tax-efficient withdrawal strategy for your retirement accounts and explore tax-advantaged vehicles to minimize your tax burden in retirement.

There are three accounts that you might pull from in retirement: qualified (pre-tax, principal and gains are taxable), non-qualified (after-tax principal, gains are taxable), and Roth (tax-free). Some other options may also give you potential income tax-free cash-flow. Talk to your tax advisor and an experienced financial professional about what order of accounts can maximize your income net of taxes.

 A little tax planning now can lead to big savings later on. It’s possible that your tax bracket may be lower in retirement than it was during your career. But taxes may well go up due to growing national debt (and financial pressures to pay it off). In your tax planning, you can see if strategies such as Roth conversions and other tax-smart moves make sense for your specific financial situation.

16. What is your plan for taxes in retirement?

Taxes don’t magically disappear in retirement. In fact, they might even increase depending on your income. Develop a tax-efficient withdrawal strategy for your retirement accounts and explore tax-advantaged vehicles to minimize your tax burden in retirement.

There are three accounts that you might pull from in retirement: qualified (pre-tax, principal and gains are taxable), non-qualified (after-tax principal, gains are taxable), and Roth (tax-free). Some other options may also give you potential income tax-free cash-flow. Talk to your tax advisor and an experienced financial professional about what order of accounts can maximize your income net of taxes.

 A little tax planning now can lead to big savings later on. It’s possible that your tax bracket may be lower in retirement than it was during your career. But taxes may well go up due to growing national debt (and financial pressures to pay it off). In your tax planning, you can see if strategies such as Roth conversions and other tax-smart moves make sense for your specific financial situation.

17. Do you want to leave assets to loved ones?

Leaving a legacy is a noble goal for many retirees. Decide whether you want to leave assets to loved ones or charitable organizations. Include your wishes in your estate planning. Whether it’s funding your grandchildren’s education or supporting a cause close to your heart, leaving a lasting impact can be a meaningful part of your retirement legacy.

Make sure that your estate plan leaves ways for your wealth to be passed to your heirs in the most efficient ways possible, including for taxes. Some states also have estate taxes, so keep that in mind as you plan for your legacy wishes.

18. What will you want to happen to your estate when you are no longer here?

Estate planning isn’t the most glamorous part of retirement planning, but it’s oh-so-important. Create a will, establish a power of attorney, and designate beneficiaries for your retirement accounts. If you worry about probate, talk to an estate attorney about what different trusts can do for you.

Planning ahead can spare your loved ones unnecessary stress and uncertainty during an already difficult time. What’s more, you can also help keep over-the-top family drama and conflict to a nil by proactively planning.

19. Have you worked with a financial professional to answer these questions and more?

Retirement planning can be complex, but you don’t have to do it alone. An experienced financial professional can benefit you in multiple ways.

They should know the most important “what-ifs” to work through for your financial situation, saving you time and energy. Their experience in helping other clients navigate the financial pitfalls of retirement can bring assurance in the solutions they recommend to you. They will build a customized plan around your goals, needs, concerns, and financial situation.

They are also your financial quarterback. They can be a coach for you to stick to your plan when times are tough or things go off-kilter. And if you need to pivot or change your plan, your financial professional can give you options for what changes might make sense. In short, they can be your trusted partner on the road to retirement.

Don’t hesitate to explore what a working relationship with the right financial professional can do for you. Even if you have been a DIY investor to date, there are upsides. Retirement and income planning are very different from investment planning. See how they might be able to assist you!

20. Have you considered trade-offs or other possibilities apart from what you have planned?

Flexibility is key when it comes to retirement planning. Be open to exploring alternative strategies and considering trade-offs to achieve your retirement goals. Whether it’s delaying retirement a few years to boost your savings or downsizing your home to free up cash, thinking outside the box can lead to new possibilities and a more secure retirement future.

Working Through Your Retirement What-Ifs for a Bright Future

Retirement may seem like a distant dream, but with careful planning and consideration of these 20 questions, you can turn that dream into a reality. Grab a pen, pour yourself a cup of coffee, and start mapping out your path to retirement bliss. Take some time to work through these questions, how they apply to your situation, and what you can do to make the most of your retirement planning.

Your future self will thank you for it! And remember, you don’t have to go this alone. An experienced and versatile financial professional who understands retirement can help you make some huge gains in your goals and keep you financially on track.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post 20 Questions to Ask Before Retirement (and Answer) first appeared on SafeMoney.com.

Another way to look at it is in three stages, with early, mid, and later retirement years. The first few years of retirement are what we call the “go-go years.”

And what in the world are the go-go years? Imagine it’s the honeymoon phase of retirement, where your knees still work, and your joints aren’t creaking when you get out of bed. These are the years when you are practically bouncing off the walls with energy and excitement. It’s the retiree version of a kid in a candy store. The world is your playground, and now is the time to make the most of it.

Planning Before Go-Go(Ing)

Now, let’s rewind a bit. Before you can lounge away on a beach or take up flamenco dancing, don’t forget about that small thing called planning. You see, a fun and confident lifestyle in the go-go-years doesn’t just happen. You have to put some careful thought into it, ideally during that crucial decade just before you call it quits.

The financial experts and talking heads don’t call it the “retirement risk zone” for nothing. Not quite like ‘danger looms ahead,’ but more like ‘your lifestyle could be in jeopardy’ if you don’t plan ahead.

First of all, let’s talk money. You need a well-built plan for how much moola you will need to keep the good times rolling. Are you planning to buy a yacht, or are you cool with a kayak? Do you want to hit the road hard? Travel to distant lands? Explore new hotspots in your backyard?

How much will your goals cost? Knowing your financial goals is like having a map for your retirement adventure.

Know Your Income for the Best Outcome

And don’t be fooled – your go-go years can be a bit of a cash muncher. All those dreams of traveling, trying out new hobbies, and maybe splurging on the occasional spa day can add up. So, it’s time to whip out that calculator and crunch some numbers.

How much income do you need each month to live your best life? How much income after you have paid taxes? Where is that money coming from? Social Security? Pensions? Maybe you have a secret stash of gold bars buried in the backyard.

Whatever it is, you should have a plan for the funds will be flowing from. You don’t want your go-go years turning into “uh-oh, where did my money go?!” years.

Prepping for the Good Life

Let’s be real – retirement isn’t just about kicking back. It’s about winning at living your dream life. To do that, you have to be the captain of your financial ship. So, go ahead, plan for those go-go years, and let the good times roll – with a well-padded wallet.

But there is also a catch. Enjoying the high life is great, but not if you run out of dinero later in retirement! Your post-work span can go for 30 years or longer – quite an extended period. The burning question is this: How can you make your money last for that long?

Start with a 30-year sketch-out of what you expect your spending to look like. Not sure of what your spending will be in later years? Or perhaps you aren’t quite retired yet. No matter, your current spending will give a great clue-in as to what matters to you, what your future level of spending might be, and how much monthly income will pay the bills.

Separate your anticipated expenses into two groups:

• Essential spending, which are monthly expenses tied to your lifestyle
• Non-essential spending, which are less crucial expenses and often relating to life goals such as traveling, entertainment, recreation, and charitable giving

Since retirement can go for a whopper of a long time, 30-year projections of your spending in each category will be a huge help in planning your income. Don’t forget about the money-munching effects of inflation. Adjusting your spending estimates by 2-3% each year will help keep the good times rolling and your financial security in place.

If your income sources aren’t lining up with your financial needs, explore ways to close the gap. Annuities, bond ladders, or CD ladders are a few income-producing options that you might explore. Talk to your financial professional for more guidance.

Enjoying Your Best Life in the Go-Go Years

Life isn’t just about money. It’s about making the most of the moment – and in the case of retirement, living your dream life in many, many moments across time.

Once you have kicked off your work shoes, how will you spend that newfound free time? If you have a spouse or partner, what are their retirement goals? Do you have shared goals that you have been putting off? No doubt you have some activities that you enjoy on your own.

Before you rush into retirement, spend some time plotting out how you will enjoy this hard-earned point of life. The go-go years are typically the most active of your golden years. And the ones with the best health! So, think about how you will spend your time day to day, cross things off your bucket list, and make some fun memories that will stay with you forever.

You might even test-drive your expected lifestyle for a few weeks and see how you like it. Then once you say goodbye to your full-time career, you have a taste of what this stage of life will be: making new friends in the same age range, spending time with loved ones, getting involved with causes you care about, traveling to places you have always wanted to visit, so on.

Don’t Forget About the Later Years

Of course, the go-go years aren’t the only stage of retirement life. You also have the slow-go years – where retirees tend to take it a little easier than before – and the no-go years – when people’s health and mental capacity have changed. Those retirement dollars need to give you smooth sailing in all these phases of life.

An experienced financial professional can help you in many ways here. They can explain ways to stretch your retirement dollars and make them work the best for you. You can find options to cover healthcare and long-term care in later years with multiples on benefits paid out for each dollar that you put into various insurance products.

Again, it’s all about helping you live your best life and remain financially comfortable. Secure tomorrows start today. By planning ahead and adapting to change as needed along the way, you can have the retirement of your dreams. So, plan ahead for those go-go years, don’t forget about the slow-go and no-go years in your prep work, and enjoy this season of life. Cheers to your fabulous, financially secure retirement!

While we are on it – are you looking for someone to help you with these important questions about your financial well-being in retirement? An experienced and independent financial professional can be a great partner for helping you enjoy a lasting, financially confident lifestyle. Many financial professionals are here at SafeMoney.com who can assist you.

Get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly. You can request an initial appointment to discuss everything on your mind and put a plan into action. Should you need a personal referral, please call us at 877.476.9723.

The post Living It Up in the Go-Go Years: Enjoying Your Early Retirement first appeared on SafeMoney.com.

Well, you have probably heard of some of the more glamorous instances of unretirement: Tom Brady’s comeback. That cringe-worthy commercial featuring NFL legends Dan Marino, Emmitt Smith, Randy Moss, and Jerry Rice. Even in the entertainment world, where long-time actors like Cameron Diaz are returning to the big screen and other acting work.

Of course, unretirement isn’t just for sports stars and celebrities trying to extend their glory days. In the real world, it’s a growing trend where, for various reasons, people find themselves back in the workforce after saying farewell to the daily grind. Sometimes unretirement is a freely made choice. In other cases, it’s forced or necessary.

Do you find yourself thinking about unretiring? In this article, we will dive into why some people are dragged into it while others choose to unretire for a second-act career, financial necessity, or drive to start a business. If you happen to find yourself in a situation of unretirement, there are steps that you can take to put your best foot forward. We will also talk about what those options can look like.

What Is Unretirement?

In a nutshell, unretirement is when someone leaves retirement and, for whatever reason, goes back to work. While people’s motives for heading back to work vary greatly, the number of people unretiring has been going up since the pandemic.

T. Rowe Price released a report which found that about seven percent of retirees are looking for work opportunities in retirement. Meanwhile, 20% of retirees say they are already working full-time or part-time. According to Judith Ward, CFP and thought leadership director at T. Rowe Price, that number sat at 10% in 2021. In other words, the percentage of working retirees doubled. Many people had been forced into retirement and then re-entered the workforce a few years later.

In the T. Rowe Price report, nearly half (48%) of working retirees felt they needed to work for financial reasons. Another similar group (45%) said that they were doing so for social and emotional benefit.

Now, what are some hard, real-world reasons that people might unretire?

Unretiring by Necessity

Going back to work in retirement isn’t always a choice made with a smile and a confident stride. As research shows, unexpected events force many folks into unretirement. Whether it’s a financial setback, unexpected healthcare expenses, or a shaky investment, life has a funny way of throwing curveballs.

In recent years, many people were forced into early retirement due to company downsizing, changing work situations during the pandemic, or health reasons. This may have caused them to think that they were done working – and then the prospect of unretiring due to financial hardship could be draining. Still, having bills to pay drove them back to the office.

Unretirement Prompted by a Financial Setback

Picture this. You have saved diligently, planned for your retirement years, and then the unexpected happens. The market has some bad years, an economic downturn hits, or you just have some financially hard times.

If you are in the early years of retirement – or those crucial years just before retiring – a financial setback can hurt more than usual. This period is what financial professionals call the “retirement risk zone.” Investment losses in this span are costly, as you just don’t have the time for financial recovery as you did in your working years. Should you be taking out money from your retirement accounts for income, those losses are even greater.

Because investment losses in the retirement risk zone are ill-timed, the financial industry refers to this scenario as “sequence of returns risk.” Sequence of returns is a big reason for why people should explore ways to protect their nest egg as they enter the final stretch just before retirement. Otherwise, ill-timed losses can take quite a toll.

Medical Bills and the Uninvited Return to Work

Health is wealth, they say, but what if your health changes right after you retire? Unexpected medical bills can turn a comfortable retirement into a financial mess. And as many people can attest, the cost of healthcare has been rising over the past several years.

If you find yourself in a situation where your insurance coverage isn’t quite enough, you may have to pay some out of pocket. That may prompt an unwelcome return to the workforce, even if you had planned well for a comfortable retirement.

The Second-Act Career – Unretiring on Your Own Terms

Not all unretirements are born out of necessity. Sometimes people choose to make a comeback because they crave a second-act career. They miss the social connection that they had in their work community. They want the thrill of being in business for themselves. Or they simply want to show the world that retirement doesn’t mean they are ready for the rocking chair yet.

You might pursue consulting in your field with your knowledge and expertise. You may wish to start a company that you have long desired to launch. Perhaps the prospect of making money again excites you.

Either way, unretirement is on your terms, and as they say, the world is your oyster. You can carve out your own path, work on a schedule that is right for you, and enjoy this time as you see fit. It’s all part of the many ways in which people are redefining retirement from what it was for prior generations.

Is Unretirement Right for You?

You might not be at the point of feeling financially strapped, but maybe the thought of going back to work has some appeal. The question is whether you will enjoy or regret the decision to unretire after committing to it.

If you are thinking about taking this big step, here are a few situations in which it could make sense:

1. You need the money to pay your monthly bills, especially if you have already trimmed some expenses. Look at your budget, income sources, and see if it makes sense.
2. You want to be more fulfilled and have more purpose than what you are currently getting from your retirement lifestyle.
3. You aren’t quite eligible yet for retirement benefits such as Social Security.
4. You long for the community and social connection that you had while you were working.
5. The cost of living is rising, and supplementing your current retirement income streams will help. If you are receiving Social Security, look at the effects of returning to work on your benefits and what any tax implications may be.
6. Health expenses are high, so going back to work makes sense as you will have workplace health benefits. You may have options for this.
7. You want to stay active so that you remain in good shape and have a great health outlook.
8. You had an early exit from the workforce, but want to delay taking Social Security and maintain an income bridge until the day that you claim your benefits.
9. You want to keep your mind sharp and focused.
10. You have always wanted to own a business, and you will start a company that you have long planned for.
11. You would like to ease into the possibility of working again, and part-time work makes sense, as you don’t want to jump in with both feet yet.
12. Getting into a new line of work excites you and gives you new passion for your retirement years.

The motives for unretirement won’t be the same for everyone, and this list above isn’t exhaustive. The bottom line is that your decision to unretire needs to make sense for you.

If you are freely considering a return to work, you might also test-drive a work opportunity on a part-time basis. That can give you an idea of what your day-to-day schedule and other important matters will be prior to you making any full commitment.

What If Unretirement Is Forced?

As we covered before, you might be in a situation in which unretirement is just necessary. If you have been out of the workforce for some time, you may wonder about how to make the adjustment and shore up any gaps.

First of all, hopefully people in this situation will have a long-term financial plan. It’s time to audit your current financial situation and see how returning to work will change things.

Go home, log onto your computer, and pull up your plan. What does your spending in retirement look like at the present? How much income are you generating from different sources? Where is the money coming from?

How much additional income will working bring you? Will you be bumped into a new federal and state income tax bracket? Will it affect your Medicare coverage in any way? Can you afford to stop taking money from one of your income sources, if your work earnings will cover it? How long do you need to work before you can come back to your preferred retirement lifestyle?

Your financial plan will help you sort out these questions and more. If your current money sources aren’t paying you predictable income each month – you know what you are getting from Social Security, for example – maybe consider some money moves that will bring you some reliable income streams. You might explore annuities, bond ladders, or other strategies that can give you more financial confidence about your income, for example.

If you need to make any changes to your retirement plan, talk to an experienced and retirement-knowledgeable financial professional. They can help you work through different scenarios and see what you can do to reach a better position of security and peace of mind.

They can also help you envision how long you might need to work, and when a return to your previous lifestyle may be possible. Ask about the pros and cons of different situations, and you can make confident, well-informed decisions with that information in mind.

The Bottom Line on Unretirement

Unretirement may have a cool factor in some respects, with athletes making comebacks and actors reappearing in Hollywood blockbusters. But the real stories of unretirement are far more diverse and, at times, they are less glamorous. From financial setbacks and unexpected life changes to pursuing second-act careers and entrepreneurial dreams, the motives behind unretirement are as widely varying as the people unretiring themselves.

So, the next time that you hear about someone unretiring – or the prospect of unretiring comes up for you – don’t think of it as only a return to the 9-5 grind. It can be a second chance at a new passion, an opportunity to reinvent oneself, or a chance to maximize self-potential. Retirees are redefining what retirement looks like, and they are boldly taking life by the horns.

Whether you face unretirement out of necessity or free choice, it’s not just a trend. It’s a testament to your personal resilience and self-potential that you might have not otherwise been able to unlock. Retirement isn’t an end, but a journey.

If you do find yourself in a situation of forced unretirement, then talk to your financial professional and see what your options are. You might dig up opportunities that you might not have thought were there otherwise.

Are you looking for a financial professional to help you through the possibility of unretiring – and perhaps your retirement years in general? If you are ready for personal help, many independent financial professionals are available here at SafeMoney.com.

Get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly. You can request an appointment to discuss your goals, concerns, and explore a potential working relationship. Should you need a personal referral, please call us at 877.476.9723.

The post Unretirement: Making the Most of When You Return to Work in Retirement first appeared on SafeMoney.com.

All of that said, retirement is a moving target, and it comes with distinct phases. These phases of retirement are:

• The go-go years
• The slow-go years
• The no-go years

The go-go years are when retirees are in good health and able to do what they enjoy. That can be travel or physical activities such as pickleball or golf. The slow-go years are when retirees can still pursue those activities, but their level of involvement slows down a bit. Finally, the no-go years are when retirees have aged and their health has changed. They tend to need more long-term care support and other healthcare supports at this stage.

It’s hard to estimate how long each phase of retirement might last. That will depend on a retiree’s personal health, family history, history of taking care of himself or herself, and more. In this article, we will go over these three phases of retirement, what they might look like for how you spend your money and time, and things to keep in mind as you plan ahead.

Will You Have Enough Money for All Phases of Retirement?

While retirement evolves over time, it’s still a long journey to the proverbial finish line. You may wonder about how you can be confident about having enough income to last for all of that time.

One way to approach that question is by calculating how much you will spend in retirement. You can start by looking at your current expenses, which show what is financially important to you. Some of these expenses will stick around in retirement while others go away.

Here are a few examples. Your transportation and wardrobe expenses may shrink as you step away from a full-time career. Housing expenses are likely to remain, but that also depends on where you plan to live.

Other things may change. Will you be paying for college expenses for your kids or other loved ones? Do you plan to travel much? Will your lifestyle be very independent or very laidback? All of these questions are good to think about.

From there, break expenses into two categories: essential monthly expenses, and non-essential costs that are less frequent than your basic monthly spending.

Your essential spending will cover monthly living expenses: housing, grocery, utilities, insurance, transportation, and so on. The non-essential spending is tied to long-held life goals, such as travel, hobbies, entertainment, and charitable giving.

As time goes on, your retirement spending will likely change. Expenses for long-term care and healthcare often go up with aging. If you carry debt into retirement, paying it off can really add up in the no-go years. Inflation will also take a toll over time.

Planning for Lifelong Retirement Income

What else can you do beyond those steps for planning for lifelong income? Here are a few things to do.

Tally up your essential and non-essential expenses on a yearly basis. Run the numbers for at least a 30-year span, and have your spending go up by a certain percentage each year so you have inflation covered. You might aim for 2-3% per year as a cost of living adjustment.

When your spending increases and decreases will depend on your goals and personal situation. On the whole, however, the spending of many retirees over time might look like a valley trough or an inverted bell curve, if you were to graph it.

That is because retirement spending tends to be higher in the go-go years, go down in the slow-go years, and go up again in the no-go years due to increasing healthcare needs. A knowledgeable financial professional can help you work through these steps and see how you can plan for having enough money for a long-time retirement.

The Go-Go Years

Now, let’s get into the three phases of retirement. First, the go-go years. This period marks the initial phase of retirement.

Retirees generally have good health and a burst of energy. It’s when they want to follow through on goals and dreams that they may have put off during their working years. Traveling, volunteering, spending quality time with loved ones, and enjoying recreation like golf are common pursuits.

Financially, the go-go years may see an uptick in spending. It’s because retirees are spending money on things that matter to them at this point. Whether it’s exploring new places, taking up a hobby, or simply enjoying more leisure time, these experiences often come with a price tag.

Planning for these expenses before you retire is crucial. It will help ensure that you can keep up your lifestyle and not compromise your financial security in the long run. To that end, a well-built plan will have well-thought-out strategies for retirement savings, balancing the joys of today with the need for financial resources tomorrow.

You can think of it like riding the first hill of a roller coaster ride. It’s thrilling in the first leg of the ride, but you have to deal with twists and turns ahead, too. Your financial professional can help you navigate unique risks during this timespan, such as sequence of returns risk.

The Slow-Go Years

The second phase of retirement is the slow-go years. It’s typically when people’s physical and mental abilities start to slow a little.

Retirees can still enjoy what they were doing in their go-go years, but often at a slower pace. Their lifestyle slows down. Because of that, it’s a good point for retirees to assess their health and lifestyle changes. Then they can adapt their retirement spending (and saving) strategies accordingly. If you haven’t done so already, perhaps explore strategies that can help preserve your retirement funds so that money lasts for the long haul.

At this stage, you may spend more time at home, or your lifestyle may become less physically demanding. If you find your retirement becoming less active at this point and your plan hasn’t accounted for lesser spending as a result, take note. You may want to work with your financial professional to map out which expenses you need to cover, which ones will go away, and how you can be ready for these changes.

You might also want to think about the future and your potential changing health needs. Since our health situations tend to evolve with aging, your spending on healthcare will likely go up in later years from now. Getting financially prepared for those scenarios can make a big difference when they do arise.

Again, it’s about balancing the needs of the present with your long-term outlook.

The No-Go Years

The no-go years cover the final phase of retirement. At this point, people have moved into later retirement. Their health has changed, and as a result, physical limitations keep them from pursuing the activities they once enjoyed. Healthcare needs are typically greater.

Depending on someone’s situation, they may also need long-term care support if they are no longer able to take care of themselves. They might need home-based care, or they might live in an assisted retirement living community of some sort. Long-term care and healthcare spending tends to balloon in the no-go years due to these needs.

If someone has carried debt into retirement, paying the debt off can be really costly at this stage. That can really make their retirement savings dwindle if they are paying for health-related and debt expenses.

Income planning is crucial at this stage, as you might face a greater risk of running out of money. You might explore ways to pay for health and long-term care needs with financial products that can multiply your retirement dollars, paying multiples in benefits for each dollar you put into them. Some annuities, life insurance, and other insurance products can provide those benefits.

Long-term care insurance may also be help with high-cost long-term care services. If you do have debt loads at this stage, you could look at options that pay a steady income stream and dedicate them toward paying the debts off. Talk to an experienced and independent financial professional for more details.

Don’t Let Regret Drive Your Financial Decisions

Retirement is a moving target, and change can be intimidating. People may worry about overspending, which can to fear and stress of running out of money. It might keep them from enjoying activities or things they could afford. However, they don’t have to let this fear overtake their financial decisions in retirement.

Proactive planning can give you a roadmap to follow. As changes arise, you can adjust your plan and your spending levels. Your plan will also give you more wiggle room in how you respond to new issues that arise along the way.

As you move into the go-go years, be mindful of how your spending now can give you the lifestyle that you want. Balance that with how it might affect your finances in later years.

Depending on how your retirement assets perform, you may also have some flexibility. If your retirement assets have a good year, you might be able to spend more then. And if they have a bad year, you might pull back on your spending a bit for that year. Having some guaranteed sources of income in your plan, such as a pension or annuities, may give you more freedom to adjust your spending in these situations. They will pay you a steady base income stream regardless of what the market does.

Start Planning for Your Next Life Chapter

Whether you are in retirement or are 10 years out, there is no time like now to plan for your future. Are you looking for someone to help you walk through these different retirement phases and have a good plan in place? Do you have a set plan and want a second opinion on it?

Consider looking for an independent and knowledgeable financial professional who understands the very unique nuances of retirement and income planning. They should know the challenges and opportunities in this field of personal finance, and how to position you to have lasting financial peace of mind.

If you are ready for this personal guidance, check out our “Find a Financial Professional” section. Many experienced, retirement-knowledgeable financial professionals can be found there. You can connect with someone directly there and request an initial appointment to discuss your goals, concerns, and personal situation. If you would like a personal referral, please call us at 877.476.9723.

The post The Three Phases of Retirement: How You Can Be Ready Financially first appeared on SafeMoney.com.

Quick sum-up. A rule of thumb is a general principle to help you make money decisions. For example, the Rule of 100 is a guideline for balancing risk in your asset holdings. We will discuss it more later, but you take your age and subtract it from 100 for an idea of what percentage of your portfolio might be in growth-oriented assets, such as stocks.

Building on that concept, a retirement rule of thumb is a quick way for assessing your progress in retirement planning. In this article, we will go over six retirement rules of thumb that you can use in different ways, including:

• If you are saving enough for retirement
• How fast your retirement savings might grow
• How inflation can affect your income in retirement
• How much retirement money you might need

Again, these retirement rules of thumb are meant only as a starting point, like on a map. Your financial destination is your own, and a custom-tailored plan will help you get there.

When you are ready, an experienced financial professional can discuss your situation and come up with a personalized plan just for you.

Six Retirement Rules (of Thumb) to Follow

In a nutshell, here are six retirement planning guides that we will cover for your own use in financial planning.

1. The Rule of 72
2. The Rule of 114
3. The 25x Rule
4. The Rule of 100
5. The Rule of 70
6. The 4% Withdrawal Rule

Retirement Guide #1: Rule of 72

You are building up funds for retirement. Have you ever wondered about how quickly your money could double?

The Rule of 72 is a very handy tool for estimating that. You can use this rule to see how long it would take for your retirement money to 2x in value. That being said, keep in mind that the Rule of 72 is best for compounding growth estimates.

Simply divide 72 by an expected annual rate of return. The result is how long it would take approximately for your money to double in value. For instance, if you expect an 8% annual return, it would take roughly 9 years (72 / 8 = 9). You can run the numbers to get an idea of growth potential for your current retirement account balance.

Of course, there are downsides to this retirement saving rule of thumb. It assumes a constant (or unchanging) annual rate of return, which doesn’t happen in reality. In some years, your money will have gains, and in others, you will suffer losses.

Markets are unpredictable, so it’s best to just use this rule as a handy tool.

Retirement Guide #2: Rule of 114

The Rule of 114 works like the Rule of 72, but rather it helps you get an idea of how long it would take for your retirement money to triple. Same as before, it’s best for an estimate of compounding growth per year.

Just divide 114 by your expected annual rate of return, and you will end up with an approximate number of years for your money growing 3x. Say that you expect an 8% return pear year. In that case, it would take around 14 years for your money to triple (114/8 = 14.25).

Also like before, the biggest downside of the Rule of 114 is it assumes you will have an unchanging annual rate of return. That simply doesn’t happen in financial markets, which have periods of gains and losses. In that spirit, this retirement rule of thumb is like a road sign. It gives you an idea of where you are heading, but it’s not a play-by-play account of your journey or any detours or unexpected stops along the way.

Retirement Guide #3: 25x Rule

How much should you have saved up for retirement? The answer to that will vary depending on whom you talk to. Ultimately, the answer will depend on how much income you will personally need each year in retirement, but an idea as a starting point doesn’t hurt.

One way to get an idea is the 25x retirement rule. This retirement rule of thumb says that if you save 25 times what you would like your annual retirement income to be, your pot of money could last for 30 years. To calculate that number, multiply what you plan to spend per year in retirement by 25. The result is a quick estimate of how much money you need for retirement, according to this rule.

For instance, say that you plan to spend $50,000 per year of retirement. (25 x 50,000 = $1.25 million in estimated retirement savings.)

It might seem hard to hit this number for some folks, but remember, it’s only an estimate. And it can be very helpful in clearing out unnecessary expenses so that you have more money to sock away towards your retirement saving goal.

Many income-generating vehicles for retirement, such as annuities, can help you maximize your income, and they may also let you hit your long-term income targets without having to aim for a savings target that might seem out of reach.

Once you are in your mid-career years, putting together a complete snapshot of your expected spending and income needs in retirement can give you a much better, accurate idea of how much money is needed. Talk to an experienced financial professional for more guidance.

Retirement Guide #4: Rule of 100

As you near and move into retirement, managing risk is an important aspect of financial planning. Sequence of returns and other financial risks can be costly at this point. The years just before and in early retirement are particularly important. In fact, this timespan is often called the “retirement risk zone” for the reason of how impactful that unplanned-for risks can have on your financial security.

One general guide for balancing risk and “reward” (growth potential) in your retirement assets in the Rule of 100. The Rule of 100 is a quick back-of-envelope rule of thumb for seeing how much risk to have in your retirement holdings.

You subtract your age from 100, and the result is the percentage of your portfolio that might be allocated to growth-oriented vehicles like stocks. For example, say that someone is 65. They might have 35% of their portfolio assets in stocks (100 – 65 = 35). When you are in retirement, it’s crucial to start preserving your assets so that they last as long as you need them to – and so they can generate income for you.

For people who are younger, the percentage will be higher. If someone is 25, they might consider having 75% of their assets in stocks (100 – 25 = 75). The Rule of 100 aims to strike a balance between risk and stability as we age.

However, this rule falls short insofar as everyone’s financial situation, risk tolerance, and goals are different. You might need more assets in the “safe” percentage of your portfolio if you need a certain amount of reliable income each year. If your risk tolerance is high, you might have more of your portfolio assets in growth-driven investments, even in retirement, and that doesn’t match up anywhere close to the Rule of 100.

Your financial professional can help you determine the right balance between risk and stability. The value of the Rule of 100 is that it raises awareness of that balance.

Retirement Guide #5: The Rule of 70

We all know that inflation adds up, but just how much could it affect your retirement income? One way to see is with the Rule of 70. This retirement rule of thumb estimates how long it will take for your money’s purchasing power to be cut in half.

For instance, say that you pay $1,200 per year now for your cable TV package. How many years will it take before that same package costs you $2,400 per year? Or in other words, where your money’s purchasing power is halved?

Under the Rule of 70, you divide 70 by an assumed inflation rate, and the result is how long it will take for your money’s buying power to be cut in half.

For example, say that expected annual inflation is 3%. It would take roughly 23 years for your money’s purchasing power to be cut in half (70 / 3 = 23.3). This can be a quick way for you to see the long-term effects of inflation on your retirement nest egg and its buying power over time.

However, as with the Rules of 72 and 114, the downside of the Rule of 70 is it assumes an unchanging inflation rate over time. Inflation will vary over time with economic conditions. Sometimes it will grow at a slower pace than prior years, and in other timespans, it might even be negative with an economic slowdown. That is why it’s crucial to use it as only an estimate of what inflation could spell for your retirement savings.

Retirement Guide #6: 4% Withdrawal Rule

You have reached the finish line and are retired. You have invested and built up a retirement nest egg. Now that you have called it quits in your full-time career, you aren’t bringing home the bacon. How do you turn that nest egg into enough retirement income to live on? How do you make sure that your retirement money lasts as long as you need it to?

One long-held retirement rule of thumb in financial circles is the 4% withdrawal rule. According to this rule, you can safely withdraw 4% of your retirement savings in year 1, and then increase your withdrawn amount the next year by accounting for inflation. Over time, sticking to this guideline 4% withdrawal percentage should arguably help you sustain your assets and avoid running out of money over a 30-year period.

So, if you have $1,000,000 saved, you can withdraw $40,000 in the first year and then adjust for inflation from thereon (1 million x 0.04 = 40,000). Many financial professionals use the 4% withdrawal rule, or some variant of it, as a safe, sustainable way to maintain their clients’ quality of life in retirement.

That being said, the 4% withdrawal rule isn’t ironclad or foolproof. It was created and worked well in times of different economic conditions and market conditions than you and other retirees might experience in your lifetime.

You might use a combination of other withdrawal strategies alongside a sustainable withdrawal rate strategy so that you can maximize your income in retirement and not worry about running out of money. There are a variety of strategies that you might explore. Talk to your financial professional for some guidance on different options.

Retirement Rules of Thumb Aren’t an End-All, Be-All

These six retirement rules of thumb are among the most important guidelines in retirement planning, but this isn’t an exhaustive list. Just as importantly, these retirement rules of thumb aren’t meant to replace or serve as personal financial planning. They will fall short if they are used as anything beyond a starting point in your retirement planning process.

There are too many situations and other personal variables in which these rules might not apply fully to you. Your goals are uniquely yours, and no one else shares them. Your personal circumstances are also your own, and therefore, what works well for you as a custom-tailored financial strategy might not cut it for another.

Your quality of life in retirement is too important to leave up to chance or guesswork. That includes relying on these retirement principles solely for your money decisions.

On the other hand, working with a financial professional who has helped many other people like you can make a big difference. They can discuss your situation with you, identify gaps in your financial picture, and find solutions that are right for you.

That includes creating a long-term plan that gives you direction, flexibility for when life throws curveballs, and confidence in your financial future.

If you are looking for an experienced and independent financial professional to assist you, many are available here at SafeMoney.com. You can get started by visiting our “Find a Financial Professional” section and connecting with someone directly there. Request a complimentary initial appointment to explore a possible working relationship. If you want a personal referral, please call us at 877.476.9723

The post 6 Retirement Rules of Thumb to Keep You on the Financial Fast Track first appeared on SafeMoney.com.