Be Ready for Retirement

Your retirement budget may be a lot different from your budget while working. By the time you retire, you may have paid off your mortgage and eliminated most of your other debt, such as credit card balances and car loans. You won’t have commuting and work-related expenses. If you plan to travel or pursue hobbies, those costs may be significant, at least in your early retirement years. Health care costs may represent a substantial portion of your retirement spending, too. Longer life expectancies can make budgeting for health care costs one of your biggest challenges.

You want to be confident that your savings will last throughout your lifetime. But investing too aggressively in retirement can be risky. Falling stock prices could cause your portfolio to suddenly lose value, leaving you with far less savings than you anticipated. Yet, investing too conservatively could prevent your investments from earning returns that stay ahead of inflation. Finding the right balance between risk and potential return will be challenging as you get ready to enter your new stage of life.

Consider the Social Security dilemma

When you begin receiving Social Security benefits makes a big difference in your retirement income. You can claim reduced benefits starting at 62. Delaying benefits until your full retirement age (FRA) increases your benefit significantly. For each year after your FRA that you wait to collect, up to 70, your annual benefit increases by 8 percent. Your financial professional can help you determine your most advantageous claiming strategy.