After a working lifetime of alarm clocks and meetings, you might be looking forward to a lot more unstructured time once you retire. But taking care of one more to-do list early on can set you up for a better retirement.
The following assumes you’ve already done some basic financial planning. Ideally, before you retire, you’ll create a budget, decide when to claim Social Security, settle on a sustainable withdrawal rate from your retirement funds and figure out how you’ll cover healthcare expenses.
If any of those topics are still a mystery, consider talking to a fee-only financial adviser. If money’s tight, you may qualify for free or low cost consultations through the Foundation for Financial Planning, National Association of Personal Financial Advisors or the Association for Financial Counseling & Planning Education, among other organizations.
Even longtime do-it-yourselfers should consider getting expert retirement planning advice, says Catherine Azeles, a certified financial planner and investment consultant in Harrisburg, Pennsylvania. Although your days may be simpler without workplace demands, your finances often become more complex.
“There’s a lot more that goes into the distribution phase of retirement than the accumulation phase,” Azeles says.
After your plan is in place, here’s what to do after you actually retire.
Tweak your spending plan
Inflation and volatile markets can be problematic for anyone, but they are particularly dangerous to retirees. If you’re not earning an income, you can’t ask for a raise to compensate for rising prices. Meanwhile, bad markets early in retirement can dramatically increase the chances of running short of money.
One way to cope is to identify discretionary spending that you can cut. Trimming expenses can help you offset inflation, but it can also help you ride out bad markets, says Katherine Roy, chief retirement strategist for J.P. Morgan Asset Management.
Traditionally, retirees were encouraged to withdraw a certain percentage of their investments the first year — 4% was a popular figure — and increase the withdrawal by the amount of inflation each year. J.P. Morgan research, however, shows people are less likely to run short of money if they forgo that inflationary increase when markets return less than 5% in a year, Roy says.
