6 Ways to Plan Your Retirement Finances

As retirement nears, it is important to know what you’re going to do with your retirement fund to make sure that it’s going to last long enough. If you don’t have a plan, there’s a chance you could run out of money within five years. Then what are you going to do? Keep reading for our six ways to plan your retirement finances so they’ll last as long as you do.

 

Plan your retirement spending

Before you go into retirement, know what you want to do with your money. Whether you’re planning on playing golf seven days a week, traveling the world, or taking up a new hobby, you’re going to need funds beyond what you use to pay your everyday bills. Set a dollar amount that will let you do what you want to do during your retirement, then make sure you have that more than your basic funds to meet your needs.

 

Save in a retirement fund

Retirement fund accounts like a 401(k) or IRA are specifically designed to help you build your retirement nest egg. While these accounts have the same end goal of maximizing money for your retirement, they are set up and managed differently.

A 401(k) is established by your employer (or you if you’re unemployed) and allows yearly pre-tax contributions up to $19,500. After tax contributions can be as large as $58,000, which includes your pre-tax amount.

 

Similar retirement saving accounts like various IRAs have annual contribution limits as well. Speak with a financial planner to find out more about how retirement savings accounts, how each can benefit you individually, and how much you’re allowed to contribute to yours.

 

Monitor investments

If you have investments that you are counting on to help fund your retirement, it’s a good idea to keep an eye on them. Be aware of whether your money is growing or shrinking. If you have investments that are not yielding what you’d expected, it might be time to consider another option. Do not make it to retirement without monitoring your investments then be surprised when there’s not as much as you had originally expected.

 

Plan for inflation

Inflation is a very real thing. Remember that you might be paying $2.50 for a gallon of gas today, but that same gallon of gas could be $4.00 in 10 years. This goes for everything that you use in your daily life from food to utilities. The value of your dollar will decrease the longer you are around, so you should be sure to account for that. 

You can plan for natural inflation by increasing the amount of money you allow yourself each year. Another way you can account for inflation is to have a continual stream of income throughout retirement.

 

Find sources of income after work

You can continue to grow your retirement fund during retirement by not using it as much, or even at all. You can bring in generate income streams immediately before retirement or even during retirement with a few options. 

 

• Generate passive income
• Make wise, low-risk investments
• Get a reverse mortgage
• Get a part-time job

 

When it comes to passive income, the most common method is renting out an extra bedroom or the basement of your home. Having a renter can be a pain because you must deal with upkeep and utilities, but the monthly income from a renter is an easier way to bring in money than continuing to work full-time.

 

Find low-risk investments that will payout for you. If you have a retirement fund that’s already set, then you likely don’t need to bring in huge amounts of money in a hurry. If you make low-risk investments, then you can get money back as they payout to help supplement what you already have.

 

If you are at least 62 years old and have at least 50% equity in your home, you can take out a reverse mortgage. A reverse mortgage provider will lend you money against the equity in your home that does not need to be paid back until after you die, or your heirs sell the home. Use this reverse mortgage calculator by All Reverse Mortgage to find out if you qualify and learn more about interest rates.

 

While you are likely not planning to work during retirement, you can still bring in a regular paycheck by finding a cushy part-time job. Most retirees enjoy working part-time to bring in regular money as well as pass the time. While the likelihood of deteriorating health is why it’s not advised to plan on working a part-time job during retirement, it can be a good source of extra income.

 

Calculate your social security 

If you’re nearing retirement, you’ve likely been contributing to the social security fund for much of your life. This means that you are eligible for monthly social security payouts. You can use the social security calculator to find out how much you’ll get each month to plan for this level of income. While it will not be enough for you to live off entirely, it’ll be a good supplement to your monthly planning.