Having decent savings when you retire is not enough. Upon retiring, many factors can affect your funds over time, including inflation, taxes, Social Security, and spending habits. Retirement can last for years, so it’s important to ensure your income will carry on through the four financial phases of retirement.
Since you will have different needs and spending priorities when you retire, a retirement budget will be helpful. Maximize your nest egg by learning about budgeting for each financial phase of retirement.
Pre-Retirement (From Ages 50 to 62)
This period leads up to your retirement when you should have a better grasp of your savings. During this phase, it’ll be helpful to look into your likely income and expenses once you retire. Check your savings, pensions, Social Security, and other financial plans to ensure your nest egg will suffice.
Early Period of Retirement (From Ages 62 to 70)
The most crucial phase of retirement is the moment you leave the workforce. Now that you’ll have more free time, you might be inclined to spend more on traveling, learning a new skill, or even purchasing a second home. Factoring in these kinds of expenses is essential as you refine your budget to your new lifestyle.
Middle Retirement (From Ages 70 to 80)
By this time, you’ll likely spend less money than before, stay mostly at home, and travel only to visit family and friends. Also, you’ll be receiving your Social Security benefits, which will be added to your retirement income. So, revising your budget to accommodate all these changes is crucial during this period.
You might also want to revisit your will and estate plan in this phase of your retirement. To do so ensures your assets and wishes for the ones you will leave behind are still accurate.
Late Retirement (From Age 80 and Up)
In late retirement, expect increased expenses for health care. Although you may have Medicare coverage, there will still be out-of-pocket costs you should prepare for. Aside from that, you may need to consider assisted living or a home health aide. That said, it’s essential to review your retirement savings to ensure that they will be enough to cover all your needs.
Contact a Financial Planning Expert
Having a retirement budget is essential in managing your nest egg when you retire. Reach out to us at Lamkin Wealth Management in Louisville, KY for more information on wealth management and financial planning for retirement. Our team of financial consultants, formed by Mark Lamkin, will be happy to assist you.