Will I Run Out of Money?

Worrying about running out of money is at the top of the list of concerns for those planning for retirement or already there. Whether you’ve diligently saved a small fortune or you’re working with more modest means, the transition from saving to spending can feel almost terrifying. Of course, no one can answer this question with a definitely no, but with thoughtful planning you can move toward the probably not category .

Before we delve into strategies, let’s address a fundamental truth: Money is simple – if you have more going out than coming in, you’ll eventually face problems. While this may seem obvious, it’s crucial to understand that no financial advisor, no matter how skilled, can perform magic.

If you’re carrying debt and haven’t saved, you may need to reconsider your retirement timeline. However, don’t despair. There’s a lot you can do to shape your financial future, so let’s explore your options.

Understand Your Financial Psychology

We all have moments of financial indulgence throughout our working lives – splurging on vacations, being extra generous during holidays, or helping out family and friends. Think about these times when you spent outside your normal budget. What happened next?

Typically, these periods of excess are followed by a return to normalcy or even a bit of belt-tightening. It’s like returning from a vacation where you’ve overindulged – you give yourself a pep talk and say, “Enough is enough!”

This natural ebb and flow of spending often carries over into retirement. Many new retirees experience a brief spending spree – perhaps some travel or shopping. But this is usually followed by a period of growing financial concern. That’s where your new budget comes in.

Have confidence in your ability to adjust your spending habits. The self-control you’ve exercised throughout your working life doesn’t disappear in retirement. In fact, with more time to focus on your finances, you may become even more adept at managing your money.

Expenses will Rise and Fall

There is a reason why many guidelines suggest retirees should budget 80% of their PRE-retirement income. SO what is that 20% you won’t need any longer? Many of your work related expenses such as commuting will drop, and retirement contributions or money put into savings may fall as well.

On the contrary, retirement can hit you with some unexpected expenses, particularly in healthcare emergencies. While some expenses are unavoidable, remember that you have control over many aspects of your spending. This might mean being less generous with financial support to family or scaling back on charitable giving. It’s not always a pleasant thought, but it’s an option you have if needed.

Determine your Retirement Budget

The best gift you can give yourself is to do some planning before you decide to retire. Map out your finances and when you pan to retire – then make use of some handy tools to ‘self-advise’ or meet with a financial advisor – both are valid options and a wise choice in planning ahead. You are best served realizing NOW if you need to work an extra few years.

Start Here:

There are SO many tools out there, we tried a few and found this one at Charles Schwab was pretty simple. It did not bombard us with too many complicated questions – plus it allows you to easily adjust your inputs afterward to gauge if you are on track to retire when you thought and how it would all look if you changed a few variables. Finally, what we really liked was that it did not ask us for our contact information at any point.

Remember, careful planning and proactive management are key to ensuring your retirement years are financially secure. By taking steps today, you can safeguard your future and enjoy the peace of mind that comes with financial stability