Wise Financial Strategies to Implement After Retiring
You meticulously saved and watched your finances throughout your working years, so you could have a good retirement. But now that you’ve finally reached that dream goal of retiring your hard work isn’t done yet. You still need to keep a close eye on your finances to ensure you don’t overspend and end up short come the later years of retirement.
To make sure your after-working years are the financially-stable, enjoyable time you want them to be, these are the wise financial strategies you need to implement after retiring.
Keep A Close Eye on Your Income Streams
Before you know how much can be spent, or if you can afford to take that weekend trip, you need to know how much money you actually have coming in. Most retirees will have two streams of steady, monthly income coming in: social security benefits, and a retirement plan like a 401(k) or (much more rarely) a pension. These two things will form the basis of your income, but is that enough?
For the average senior, these two things alone will not be enough. You will need supplemental income like a personal savings account or additional income streams to support your bills and extra activities.
The first part of being successful in your endeavors is to know where you stand. Know where your steady streams of income are coming from and how much you have set back besides that.
Consider Getting Gap Coverage
Most seniors will utilize Medicare Part D for their health insurance. Unfortunately, that may not be enough alone for some individuals. This includes anyone with a preexisting health condition or who takes prescription medications and/or natural supplements on a consistent basis.
Gap insurance is a type of health insurance created specifically to fill in the non-covered areas of Medicare Part D. This can significantly reduce the out-of-pocket costs on prescriptions and other medical expenses.
Get Rid of Debt FAST
The ideal situation would be one where you enter retirement having paid off all outstanding debt. This might include your mortgage, car loan payments, credit cards, student loans for yourself or children, etc. Yet not everyone can manage to pay off all their debt during their working years.
If you enter retirement without any outstanding debt you can typically afford to live a comfortable lifestyle on 80% of the income you made during your working years. If you have not, however, this will be hard.
Those who enter retirement with outstanding debt should make it a point to pay it all off as quickly as they can – even if it means they may have to forgo any extra activities for the first year or two of retirement. Doing so will pay off in the long term.
Keep Your Savings Growing Interest
The average senior now lives for two to three decades past the point where they retire. This means you need to keep a sizable portion of your savings in your account to continue growing interest. The best way to do this is to only pull out what you will need on a once or twice-yearly basis. That way, the rest will continue building compound interest for the years to come.