Every year since 2001, Gallup has conducted a survey to measure Americans’ top financial worries. Medical bills, cost of living, and investment volatility are commonly cited by respondents as significant concerns.
However, the study has delivered the same number one financial worry for sixteen consecutive years. It’s the concern that one won’t be able to afford retirement. In the 2016 study, 64 percent of Americans said their primary financial concern is that they won’t have enough money to retire comfortably.1
It’s an understandable fear. Retirement is a substantial financial goal. Your retirement could last multiple decades. While you may have income from sources like Social Security or an employer pension, you will also likely need to take distributions from your retirement accounts to fund your expenses. To generate the required income, you may need to accumulate a significant amount of assets.
The good news is that retirement doesn’t have to be stressful. If you’re quickly approaching retirement and are worried about your financial stability, there are steps you can take to eliminate uncertainty and minimize your fear. Below are three great strategies to take the financial worry out of retirement:
Downsize to a smaller home.
A successful retirement is as much about limiting your spending as it is about accumulating assets. Even if you miss your savings target, you still may be able to make your money last if you can cut back on your spending.
One effective way to reduce spending is to downsize to a smaller home. It’s possible that you may have strong emotional ties to your current home. However, it’s also very possible that you won’t need the extra bedrooms, square footage, or yard space in retirement.
Larger homes tend to come with higher costs. Even if the mortgage is paid off, a large home may still generate high costs for things like taxes, insurance, utilities, and maintenance. By moving to a smaller home, you may be able to minimize or even eliminate some of those costs.
Also, if you have a significant amount of equity in your home, it’s possible that you may net proceeds after selling your home and buying a smaller one. You could contribute those proceeds to your retirement assets to help generate income in the future.
Find creative ways to use your skills and talents.
Another way to take some of the uncertainty out of retirement is to find ways to generate income. That doesn’t necessarily mean that you have to continue in your career or work in a traditional sense. You may be able to use your skills and experience to earn income and still maintain the freedom and flexibility that comes with retirement.
For example, if you are passionate and knowledgeable in a certain area, you could teach lessons or even do freelance consulting. You could drive for a ridesharing service or rent out space in your home. You could even teach a course online or perhaps continue working in a part-time advisory role in your industry.
You have likely accumulated a wealth of experience and knowledge throughout your career. Be creative and think of ways to use those talents to generate income in a flexible way.
Create a guaranteed* retirement income stream.
Many individuals have stress about retirement because they fear that they will run out of money during their lifetime. You may have guaranteed* retirement income in the form of Social Security or even a pension, but your distributions from your IRA or 401(k) may not be guaranteed. If you withdraw too much money too soon or if your investments decline, your funds may not last.
You can address this risk by creating your own stream of guaranteed* lifetime income. Annuities offer a variety of ways to turn a sum of money into income that is guaranteed* to last through your lifetime, no matter how long you live. Some also offer opportunities to grow your funds with downside risk protection.
Are you worried about retirement? Ready to develop a plan to eliminate that stress? Let’s talk about it. Contact us today at Carstens Financial Group. We welcome an opportunity to analyze your needs and create a strategy. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
16291 - 2016/12/19
Carstens Financial Group focuses on providing comprehensive asset management, estate planning and life insurance solutions. Allow us to help you secure your financial future.