How to Mentally Let Go of your Career when Entering the Retirement Zone

If you are fortunate enough to enjoy the career that you are working in, chances are that you may not have given a second thought to your retirement – even though that day will arrive sooner than you think. However, you will not only need to prepare for your retirement in a physical manner by having sufficient savings, you will need to be emotionally and mentally prepared for the day that you are going to walk through the office doors for the last time.

Pursue New Interests before Retiring

While this may sound counterintuitive, research has shown that people who are already engaged in outside interests, activities or hobbies during their career years will usually find it easier to transition over to the world of retirement – or even semi-retirement in some cases. The key here is to start exploring other interests or activities before you retire from your job, so that you will not find yourself at a completely loose end on the last day of your official working career.

Focus on what you would like to do next

Do you want to let go of your career in its entirety or do you simply want to scale down your hours and continue working part time after you have officially ‘retired?’ Many people think that once they have retired, they can no longer be an important contributor to society. However, this is not the case at all, as having additional free time on your hands will actually enable you to spend time helping those around you. For example, if you are passionate about the welfare of kids, animals, the elderly – or all of the above – consider volunteering at the appropriate charitable organizations, where you will still be able to make a tremendous difference in the lives of folk around you.

Consider Starting a Business

Although many people think that they are too old to start businesses after retiring, this is not the case – as the old saying goes, ‘you are only as old as you feel.’ If you are knowledgeable in a particular area or you are passionate about a specific hobby that you are engaged in, why not turn it into a sideline business. This will not only enable you to continue earning a little spending money; it will enable you to focus your interests elsewhere other than on what you previously did to earn a living as well. If you’re a devoted animal lover, for instance, consider walking dogs and earn a few dollars while doing something that you truly enjoy.

Letting go of your career upon retirement doesn’t mean that you have to sit at home and vegetate or putter about aimlessly, while reminiscing about the career or job you once had. In fact, many retirees these days are finding that they are leading far more active and fulfilling lives after they have stopped work in an official capacity than they could ever have imagined.

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The Only Time you Should Ever Dip into your 401(k)

A 401(k) is a specific account that enables you to save a set amount of money each month that you will be able to use to live on during your retirement years. While it is possible to dip into these savings before reaching retirement, this is not a good idea. However, there is usually only one instance where making this money move is recommended, which will be discussed below.

When Fast Repayment is Possible

The only time you should ever consider dipping into your 401(k) is if you happen to be in an extremely tight spot financially and you know for certain that you will be able to repay all of it within a few months at the most. Although you will still lose out on potential interest when doing this, you will not be affecting your bottom line or final payout as much as if you had to repay your loan over a longer term. For example, if you have a sudden unexpected medical expense that you cannot afford to cover or you are facing foreclosure on your home, but it is a guarantee that you will be receiving a work bonus in a month or two that will cover the amount in full; a 401(k) loan may be a good idea.

A Double Disadvantage

Although you may be relying heavily on Social Security to pay you each month after retiring, there is more and more evidence coming to light where the amounts being paid are not nearly enough to live on – especially if you suffer from health conditions or live in area where the overall cost of living is high. When borrowing from your 401(k) for any reason, you end up losing out twice – the first time is when you lose out on the compound interest that could have accumulated on your loan amount over time, and the second is because you are shrinking the amount of money that you will have to live on after you have stopped working by a substantial amount.

Prepare for Retirement Early

If you are young, you may be thinking that ‘you still have many years to plan and save for the retirement years.’ However, the earlier you start contributing to a 401(k), the larger your nest egg will grow over time. If you start contributing in your 20s, you can contribute smaller amounts each month as opposed on only starting in your 30s or 40s because the power of compound interest during your 20s will make a difference of as much as $100,000 or more to the final amount in your 401(k) account – this can make all the difference between being able to enjoy yourself or having to survive on ramen noodles during your golden years.

In cases where your employer offers to match your 401(k) contributions, it is advisable to take advantage of this as well, as this will enable your nest egg to grow a lot quicker as well. If you are looking for advice pertaining to retirement investments, contact us today to see how we can assist you.

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What to do When Medical Expenses Pop Up in Your Retirement Years

Although your retirement years should consist of as much relaxation and enjoyment as possible, there is always a chance that you could be faced with having to cover the cost of unexpected medical bills as you grow older. Should you be unfortunate enough to be faced with this situation, there are a few steps you can take to ensure that your financial nest egg will be impacted as little as possible.

Don’t Rely Solely on Medicare

Many older folk are under the impression that Medicare will kick in and cover all of their health-related expenses once they have turned 65. However, this is not always the case, which is why you should consider the options of a Medigap policy from a private insurance company and/or a Part D prescription medication plan. It is also important to remember that you will only be able to buy Medigap cover if you already have Medicare Part A (hospital-related services) and Medicare Part B (general doctor services) in place. This will go a long way in helping to cover any potential medical shortfalls you may experience when it comes to healthcare coverage in your retirement years.

Ask About Alternative Options

If you have been using the same prescription for a while, you may be used to simply having it refilled each month without giving much thought to the out of pocket costs. After retiring though, you will want to ensure that your medical expenses are as affordable as possible, and one of the best ways to do this is to ask whether there are any generic options available for your particular prescription. This simple move can help reduce your monthly out of pocket expenses by as much as 50% to 75%. You may be able to further reduce costs by switching to preferred healthcare providers or by asking your healthcare provider about the possibility of prescription discount cards.

Research Available Assistance Programs

You should never be afraid to ask for help when it comes to covering your essential medical expenses during your retirement years. In fact, there are organizations out there that will be able to assist you if you are struggling to afford even the most basic healthcare. For example, if you need to replace a pair of glasses, the Rotarians will normally be able to provide these, along with your eye exam, at highly affordable rates. If you are in doubt about whether you qualify for any form of medical assistance, organizations such as the American Association of Retired Persons (AARP) will be able to provide you with any information you may need in this regard.

The adage of ‘prevention is better than cure’ certainly applies when it comes to curbing medical expenses during your retirement years. One of the best ways to keep your medical costs as low as possible during this special time of your life is to ensure that you do everything possible to remain as fit, healthy and active as possible.

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Why Teaching Your Kids to Save at an Early Age Is Just Good Practice

As parents, we have a duty to raise our children to become happy, healthy, and responsible adults. One of the best things that we can teach them – even as young as three years old – is how to save money. Teens and young adults who have a firm understanding of budgeting and saving have a far greater chance of becoming responsible and successful in their later years.

In Their Early Years

Childhood development experts suggest that children as young as three years old have the ability to understand the basic concept of money. A three-year-old knows that the toy he or she wants costs money, and he or she is capable of understanding that you, as the parent, have to go to work to get that money. One of the best ways to start instilling values into very small children involves teaching them how to count dollar bills.

For example, if your child wants to purchase a doll that costs $20, count out twenty $1 bills and explain this is what it takes to buy that doll. Then, explain to your child that you will give her a $1 bill each time she completes a certain task. When she has enough, she can buy the doll. It sounds simple enough, but even something as basic as counting out $1 bills together can lead to a lifetime of responsibility.

As They Get Older

As children get older, they start to want more expensive things. For instance, your son may ask you for a cellphone. This gives you yet another opportunity to instill a sense of budgeting into your child. A cellphone comes with a monthly bill, so you can explain to your son that he will need to save his money – whether from a part-time job or his allowance – to pay a percentage of that bill each month.

Things really kick into gear when kids turn 16 and they want to buy a car. This is probably the biggest opportunity you will ever have to help your child learn how to save. Hopefully, you started early and helped your son or daughter create a savings account, and there might just be enough there to pay for a dependable car. You will also have to teach your child about the responsibility of carrying insurance, buying gasoline, and paying for basic maintenance and repairs. What’s more, you will also need to help your child learn the importance of putting money in a savings account for a rainy day.

What You Really Teach Your Kids

In short, when you start at a young age and continue to teach your children how to budget and save money, you do all of the following:

  • You teach them that they have to earn the money to buy the things they want or need.
  • You teach them the value of that money so they are less likely to spend it on things they don’t need.
  • You teach them that it is important to set money aside for things that might come up unexpectedly.
  • You teach them that they have to budget their money to pay for their monthly responsibilities, such as auto insurance or cellphone bills.

There is no denying that teaching our kids the value of a dollar is just good practice. When they know how to save and how to spend responsibly, they become more responsible adults with a much better chance to succeed in all aspects of their lives.

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