Maximizing Retirement Bliss: Financial Strategies You Need

Retirement doesn't have to mean living on a shoestring budget. Here are some ideas for keeping life fun while maintaining a healthy bank account.
Written by Karen Lawson
Financial Expert
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Whatever happened to not trusting anyone over thirty? Although 65 may not be the new 35, here are some tips for retiring comfortably without sending your disco wardrobe to the consignment shop.

Draft a Retirement Budget 

Financial advisor Jane Bryant Quinn suggests that the first retirement stage involves planning and determining your retirement budget. Starting this process about five years before you plan to retire can assist in determining when you can afford to retire.

You can use a retirement calculator to help estimate how much you’ll need to meet your expenses and still have enough money to enjoy life.

Estimate anticipated living expenses to determine how much you’ll need to retire comfortably. Be realistic and consider potential healthcare costs, travel, and leisure activities.

See Which Banks Have the Best Savings Account Rates

Savings rates are high at some of the best online banks right now, but if you’re using a traditional, big-name bank, you’re probably missing out on these rates.

Here are our top picks for those who want to earn the highest interest on their savings.

Change Your Investment Portfolio

Gradually converting higher-risk investments, such as stocks and mutual funds, to lower-risk investments can help preserve capital, such as certificates of deposit or money market accounts. The interest rates paid on these accounts are higher than they’ve been in a decade.

Even savings accounts are offering the best interest rates in 15 years. Diversify your portfolio to reduce risk and maintain stable income during retirement.

Calculate Expected Retirement Income 

There are no guarantees with market volatility and companies reducing and eliminating retirement benefits. Still, you can get some idea of your retirement income by considering the current principal amount of savings, such as money market accounts.

The Social Security Administration also provides an annual estimate of benefits each year. Other assets, including home equity and investments, can be more challenging to pinpoint, but consulting a financial planner or advisor may help estimate your retirement income.

Consider Healthcare and Long-term Care Expenses

Increasing healthcare needs typically occur during retirement, and planning for more healthcare expenses makes sense. Investigate long-term care insurance options to ensure you’re financially secure in case of unexpected health challenges.

Learn the Best Time to Start Social Security

Drawing social security benefits between the ages of 62 and 66 can cause your benefits to drop by as much as 30%. If your income exceeds the annual amount determined by law, your benefits will be reduced.

Waiting until you’re eligible for full benefits eliminates any reduction in benefits due to additional income. However, waiting until you turn the maximum age of 70 to start collecting benefits can cause you to sacrifice the benefits you’re entitled to.

Review Your 401(k) Account

Depending on the terms and conditions of 401(k) accounts, you may wish to convert them to individual retirement accounts (IRAs). Consult a financial advisor to evaluate various options and determine which investment strategy aligns best with your retirement goals.

The Bottom Line

Retiring may not mean trading your platforms for sensible shoes, but it does require closely managing your income and budget so you can enjoy life.

With careful planning, you can ensure a financially secure and comfortable retirement while remaining true to your unique style and interests.

By staying informed and making well-informed financial decisions, you’ll be well on your way to savoring the golden years of your life.

Frequently Asked Questions

When should I start planning for retirement?

It’s advisable to begin retirement planning approximately five years before your intended retirement date. This gives you ample time to create a retirement budget, estimate your retirement income, and make necessary adjustments to ensure a comfortable retirement.

What factors should I consider when drafting a retirement budget?

When creating a retirement budget, consider your anticipated living expenses, potential healthcare costs, travel, and leisure activities. Be realistic in your estimates to ensure you have enough money to retire comfortably.

How can I maximize my retirement income and manage my budget effectively during retirement?

To maximize your retirement income, carefully choose when to start collecting Social Security benefits and consider converting 401(k) accounts to IRAs. As you retire, transition your investment portfolio to lower-risk options and diversify to maintain a stable income. These strategies will help you manage your budget effectively throughout retirement.

About Author
Karen Lawson
Karen Lawson, a seasoned banking professional with over 15 years in mortgage loan servicing, is an expert finance writer at MoneyRates. A key player in Fannie Mae’s western regional loss mitigation team, Karen has overseen and approved numerous mortgage loan loss mitigation cases, highlighting her depth of expertise. Holding both B.A. and M.A. degrees in English from the University of Nevada, Reno, Karen’s academic accomplishments mirror her professional ones. She advocated at the university’s Sanford Center for Aging, passionately addressing issues and shaping public policies for senior citizens. Her extensive background in the financial and societal sectors makes her a credible voice in the banking industry.