It can be a scary proposition to leave behind the security of a regular paycheck and face the blank slate of constructing your own new lifestyle. Will you be able to support yourself? Will your health hold out? What will you do with all the time?
Of course, you can't predict the future. You might suffer an unexpected illness that will leave you dependent on caretakers, or an economic disaster that reduces your standard of living. But barring a life-altering event, here are the four cornerstones of retirement security.
1. Be prepared. The key to financial security is to have access to enough resources to support your chosen lifestyle. That doesn't necessarily mean you need a lot of money in the bank. Most of us have Social Security. But if that's all you've got coming in, then plan on living in a very modest zip code. Maybe you will supplement Social Security with a pension. If you don't enjoy the benefit of a pension, then hopefully you have an IRA or 401(k) to provide additional income. Maybe you will receive rent from an income property, alimony payments or insurance benefits. Also, since you are on a fixed income, you should be paying off debt, not taking on new debt. There are few things that provide a better sense of security than a mortgage-free roof over your head.
2. Create a budget. Before you start building your retirement life, you should have some blueprints. First, project what your expenses will be in the coming years. Many people avoid this issue because there are so many unknowns. But you can estimate your housing expense, insurance, car, travel and food costs. Look at each category and come up with a round number for what you've been spending over the past few years. Many credit card companies provide a year-end statement that can help you do this. Then think through how your expenses might change. You might choose to spend less money on clothing and kids, but perhaps more for doctors and fine dining. Hopefully, your projected income will be in the same neighborhood as these projected expenses. If not, then you need to go back to the drawing board and reconfigure your plans.
3. Focus on your health. The biggest threat to retirement security is a major medical issue. A health problem can jeopardize your financial security, and more importantly, significantly affect your lifestyle. The first step is to sign up for Medicare and purchase an appropriate supplemental medical policy. Then make a realistic assessment of your health and accommodate any physical limitations. Even if you're in perfect shape, you should age-proof your home with bathroom grab bars, extra lighting, non-slip floors and similar types of modifications to avoid falls or accidents. Also, in retirement you have more time and motivation to eat right, get some exercise, drive carefully and do all the things that will support your health and allow you to live out your retirement dreams.
4. Hold tight to family and friends. Having a happy, supportive marriage offers people companionship and a sense of security. But, married or not, friends can provide you with a strong support network. You never know when you'll need a friendly shoulder to cry on. Maybe you'll need a friend to take care of your pet while you're on vacation, or drive you to the doctor when you're sick. And just because you're retired from work doesn't mean you're retired from life. So do something that takes you outside of yourself, such as a part-time job, volunteer work or babysitting grandchildren. Only you can decide what's worth your time and effort, but doing something you find personally rewarding helps you achieve a sense of autonomy and self-worth.
All the advice in the world is useless if it isn't relevant to the lifestyle you've chosen for retirement. These building blocks are intended to help you lay a solid foundation, but not to cramp your style or restrict your living arrangements. So don't worry if you're a little short on assets, don't have an intimate relationship or haven't found a part-time job. To a large degree it's your attitude that determines how secure you feel. This is your retirement. It's a time and place to do what you want, not what someone else tells you to do. The most secure retirement is the one where you're comfortable in your own home.
Tom Sightings is the author of "You Only Retire Once" and blogs at Sightings at 60.
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