Patriot Wealth - January 2019

HOW TO SPEND WISELY IN RETIREMENT MAKE YOUR SAVINGS LAST

When it comes to retirement and finances, there’s enough material about saving to fill a library. You see commercials on TV showing one tiny domino gradually becoming a massive tower, you hear advice from coworkers and family members, and you read books and articles on the topic. Much less attention, however, is paid to how to spend those savings once you’re actually retired, even though it’s a significant part of the equation. After all, it doesn’t matter how much you save if you blow it all in a year. Here are a few considerations to keep in mind as you begin chipping away at that nest egg.

In this system, you simply estimate how many years your retirement will last and divide your savings by that number. It’s better to make a generous estimate rather than a conservative one. A survey of financial planners conducted by the American Institute of Certified Public Accountants (AICPA) found that outliving savings is the No. 1 concern of those approaching retirement. Underestimating your life span is an easy way for this fear to come true. Of course, a level spending plan assumes that your financial needs won’t change over the course of your retirement. If you’re the type of person who regularly meets and exceeds your budgeting goals, you can probably make it work. If not, you may want to consider a plan that allocates more money with each

passing year of retirement. In the event of increased medical costs or other later- life expenses, an escalating plan provides a financial safety net.

WHAT TO SPEND ON

Some of your spending choices will come down to personal preference and interests, but you might be surprised to learn that one category of spending consistently proves more fulfilling than others. Professor Michael Finke of The American College surveyed nearly 1,500 retirees and found that spending money on leisure activities and experiences caused the lowest rate of regret. Finke calls this “social spending” and surmises that it’s favored because it encourages older adults to get out into the world and enjoy their retirements.

HOW MUCH TO SPEND

The easiest way to budget for your retirement is with a level spending plan.

FIND PEACE IN A BUDGET THE TRUE PATH TO FINANCIAL FREEDOM IS THROUGH A PLAN

‘PEACEFUL, EASY FEELING’

For many people, budgeting is about as enticing as vegetables are to a 3-year-old. That’s often because their approach toward money is centered on the concept of freedom — if you spend how you please, then you’re free, but if you have to allocate every cent from your paycheck, then you’re limited. But if bills are sneaking up on you and you’re not prepared, are you in control of your money, or is your money controlling you? And if your money is controlling you, are you really free? Like any new habit, the hardest part of creating a budget is getting started. Studies suggest it takes 66 days to create a new habit, so you need patience in the beginning stages of budgeting. If you’re worried about it, let technology help. Few of us are spreadsheet savants, but the good news is you don’t have to be. New applications, like Mint, make managing your cash easier than ever. ‘START ME UP’

Once your budget is set, coming up with a plan for when payments should be dispersed will help put your budget on autopilot. The byproduct of this is significantly less stress — when you know what to expect every day of the month, you minimize the burden that comes from missing payments. Set up your schedule on auto pay to start, and once the initial work of the automated process is done, you can sit back, relax, and know your finances are taken care of. When unexpected events arise that aren’t in the budget, it can cause serious worry. Just as we mentioned in the cover, setting aside a specific amount of money for emergency expenses will create room for complications and, in turn, peace of mind about your money. A buffer like this is a great way to avoid debt and keep your financial plan on track. January is a perfect time to look at your financial goals, and we want to help. If you’re looking for budgeting tips that fit with your long-term objectives, give us a call today. ‘WE DIDN’T START THE FIRE’

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