Various Stages of Retirement to Consider

While you’re formally employed, there would have been various steps of the career ladder that you navigated along the way. Your retirement years will work in much the say way, with various stages to take into consideration. Below is a simple breakdown of what you could expect to encounter during each of them with regards to finances.


Stage One – the Beginning of Retirement

Otherwise known as the honeymoon phase, this is when a lot of retirees tend to be the most active. The initial excitement of now being able to engage in activities that they couldn’t partake in before due to time constraints is experienced during this time. In addition, younger retirees are usually in better health, meaning that they will want to do as much as possible during this time. 

As a result of being more active during these first few years, you could find yourself spending more money – especially if you’re traveling more than you did before. However, it’s crucial that your retirement funds be carefully managed during this time. Failure to do so could result in you struggling to make ends meet later on.


Stage Two – Slowing Down

This stage starts taking place approximately ten years after you’ve retired, and you find that you’ve grown tired of traveling and any other leisure-related activities that you were enjoying at first. You may find that you’re also ‘starting to feel your age’ at this point, causing you to slow down a bit. 

Age-related health conditions may also start making their appearance during this time, resulting in you having to spend a bit more money on medication and other required treatments. During this time, you could notice an increase of between 3% and 5% on your cost of living each year. 


Stage Three – Nearing the End of your Life

This stage of retirement takes place when you’re reaching the end of your life. Although it’s difficult to determine exactly when this stage will arrive, it normally tends to be when individuals become frail and more inactive. During this stage, you might find that you’re no longer interested in activities that you once enjoyed and you may even find yourself staying home a lot more than before.

During this final stage of your retirement years, you will most likely also see a decrease in your regular monthly expenses. However, increasing healthcare expenses or even the cost of relocating into an assisted living facility could cause your living expenses to skyrocket. As a result, you can expect an average cost of living increase of as much as 5% per year if you intend keeping up with your current lifestyle. 

It’s important to keep in mind that the information above is merely a basic guideline because no one ever knows how your living conditions or circumstances could change after retiring. As such, now is the right time to start putting a retirement plan into place. If you would like to learn more about compiling an effective financial plan for retirement, speak to our team today. 

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How much does that Second Job really Pay?

Many families are finding it more and more difficult to make ends meet each day, which has resulted in a number of individuals taking on second (or even third) jobs to ensure that they can keep meeting their monthly obligations. While it can seem like a good idea to have more than one job at a time, there are some aspects to consider beforehand.


Increased Mental and Physical Fatigue

Taking on a second job could result in you wearing yourself down mentally, emotionally and physically – far quicker than if you were only working at one job. While it may sometimes be possible to overcome these feelings after a while, it’s essential to evaluate your position every few months to determine whether the additional fatigue is worth what you’re being paid at the second job or not. 


Less Focus on your Main JobMain

Another issues you may encounter when taking on a second job is that you won’t be able to give as much focus to your main job as you did before. Over time, this could become problematic, especially if the lack of focus prevents you from being able to perform, as you should.


Less Family Time

When taking on a second job, it not only means that you’ll be spending more hours working; you will unfortunately also be spending less valuable time with your family. While this may not seem important initially, young children can often become upset when they aren’t able to spend as much time with a parent as they did previously. 


Take Additional Expenses into Consideration

Many individuals only see the initial amount of money they’ll be earning after taking on a second job. However, it’s essential to take additional expenses that will be incurred into consideration. 

For instance, your gas bill will more than likely increase as a result of driving to and from your second job. You may be required to purchase uniform or other items that can only be used while working or even cover the cost of additional meals out while on the job. 

Another expense that many parents forget to take into consideration when looking at taking on an additional job is that of childcare – especially if the second position is going to require night shift hours. Many sitters will charge higher than average rates for taking care of children during evening hours. 

Before agreeing to take on that additional job, it’s essential to calculate how much of your extra earnings will be going towards job-related expenses. If you’re only going to be netting a dollar or two per hour after deductions, it will probably not be worth your while to take the position.

Another point to consider before taking on additional employment is taxes on the earnings from it. As such, it may be a good idea to chat to a professional financial advisor beforehand. They may be able to help you trim your existing budget in such a way that you won’t need to take on additional employment in order to make ends meet. 

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Why a Budget is Essential for Financial Success

While virtually everyone wants to accumulate as much wealth as possible, few are actually doing anything to achieve their goals and dreams in this regard. However, the fact remains that the only way to become truly successful with your finances is to compile a realistic budget and stick to it as religiously as possible.


Enjoy a More Fulfilled Retirement

While you may already be a responsible spender who follows a strict budget, this may not be enough on its own to ensure a retirement that you’ll be able to enjoy. Saving a portion of everything you earn is a crucial step for ensuring a decent retirement. 

Compiling a budget can help you see how much money you have left over after monthly expenses such as rent or mortgage, groceries, transport and other essentials have been paid for. If you’re overspending, you’ll either have to cut back somewhere or find a better paying position so that you can start contributing to various retirement accounts. Having enough funds saved for retirement will make all the difference between being able to enjoy your golden years or having to work one or more jobs just to pay the rent and put food on the table.


It Prepare for the Unexpected

No one ever knows when or if any type of emergency situation will occur, such as a vehicle breakdown, a burst water heater or a damaged sewer line that floods your property. In most cases, instances like these will happen at the worst possible time – which is why it’s crucial that you prepare for them as much as possible beforehand.

Your budget should include an emergency fund that amounts to between three and six months’ living expenses. This will help ensure that you don’t incur any debt if a financial crisis occurs. The easiest way to build your emergency fund is to set aside an amount from each paycheck you receive in a dedicated account. 


It can Reveal Bad Spending Patterns

Compiling a budget will not only enable you to see where your money goes; it will help reveal whether you’re overspending on any item in particular. For example, are you spending a few hundred dollars a month on takeout? Do you ever watch all 150 channels that are aired by your cable provider?

Seeing everything on paper will help you re-evaluate where you could be overspending. Once financial drains have been identified and stopped, those funds can then be allocated towards retirement saving or towards building a decently sized emergency fund. 

While many individuals prefer to use a good old-fashioned pen and paper for compiling their budgets, various apps and budgeting software programs are now available than can assist with this process as well. If you would like to start managing your finances in a more responsible manner but you’re unsure of how or where to get started, speak to one of our team members today. We look forward to assisting you in any way possible. 

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Avoid Making these Retirement Mistakes

Retirement is something that many people look forward to while they’re still working. As such, it’s important to ensure that you have planned correctly along the way for this time in your life. Below are a few mistakes you should do everything possible to avoid making.

1.  Filing for Social Security benefits at the Right Time


Many retirees will rely almost entirely on Social Security benefits to make up the bulk of their income once they’re no longer working. This means that you’ll have to ensure that you’ll be able to obtain the maximum allowable benefits possible from this source. 

One of the best ways to ensure that you can obtain as large a payout as possible from Social Security is to only file after you have reached full retirement age (FRA) and not as soon as you’re eligible to apply. Keep in mind that some other aspects such as spousal and disability benefits can also play a role in the amount of Social Security income you eventually receive.


2.  Continuing to Accumulate Wealth after Retiring

Very few retirees will have sufficient liquid assets or cash savings to last them through their golden years. As such, many of them will have to continue generating some form of income after officially retiring. This could mean continuing to work part-time for some individuals, while others may be able to rely on CDs, stocks and bonds to keep afloat financially.

While you may not need to generate as much income as you did prior to retirement, it’s strongly recommended that you generate enough to cover basic living expenses such as groceries, gas and entertainment costs. 


3.  Not Correctly Strategizing 401(k) or IRA Withdrawals

Although several individuals work extremely hard and save a good amount of money towards their retirement, too many of them still see large chunks of it disappearing because of tax penalties that are charged when they withdraw their money. 

If you want to avoid being penalized (and who doesn’t, especially after working so hard to save that money in the first place?), it’s crucial to establish a withdrawal system that will minimize tax penalties as much as possible. This can be done by taking your Require Minimum Distributions (RMDs) into consideration. It’s also essential to confirm that your existing withdrawal strategy takes life changes into account, such as potentially increased healthcare expenses or a reduction in income after you’re no longer employed full time. 


4.  Not Curbing Living Expenses – Even after Downsizing

The main goal of downsizing is to help keep your monthly expenses as low as possible after retiring. However, several retirees find themselves paying higher transportation, tax, food and utility related costs because they fail to take the cost of living in their new location into consideration. 

It’s crucial to take all of these expenses into account before relocating – especially if you’re moving out of state. This will prevent you from having to relocate again at a later stage just that you can remain afloat financially. 


Every retiree’s personal and financial circumstances will be unique. If you would like to chat with a professional about restructuring your financial plans, contact us today. 

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