Florida Women's Law Group - January 2019

HOWMUCH TO SPEND The easiest way to budget for your retirement is with a level spending plan. 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. There is no perfect plan for how to spend your savings during retirement. But there is one very wrong way to go about it, and that’s mindlessly. However you choose to spend your savings, make sure you have a plan.

How to SpendWisely 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.


Don’t Overdo it Today Just to Get Drained Tomorrow

The new year is the perfect time to invest in well-being, both your own and your family’s, for today and for the future. Having a proper insurance plan to fall back on in the event of the sudden loss of a loved one can help ease the panic and confusion that often accompany the pain and mourning of losing someone close to you. On the other hand, being overinsured while everyone still has their health could mean shelling out for unnecessary costs that drain the estate. While everyone’s coverage may be different, these guidelines should help put your post-holiday mind at ease. One of the most important life insurance tips is to avoid being worth more when you’re dead than when you’re alive. It is a very real risk to take out a massive policy on yourself and then trust that a schemer will not try to make that payout come to fruition sooner. On a less cosmically dangerous level, cut down on the number of riders in your insurance plans. If they seem too overcomplicated, you may be getting taken for a ride by your insurer! No pun intended. In terms of long-term care insurance, make sure you are utilizing the 80 percent rule. Committing to high premiums for 100 percent coverage just isn’t necessary in most cases. If a loved one gets put into a nursing home, for example, about 20 percent of the cost goes to essentials like food and medicine, which you would be paying for anyway. If your policy only covers 80, you’re saving that extra 20 percent in premiums, which can add up quickly.

Planning for your estate isn’t always mentally or financially easy. It’s hard to imagine what will happen after you’re gone; after all, this has been mankind’s great spiritual battle for millennia. Yet we owe it to the ones we love. If you find yourself with more questions than answers, your friends at the Florida Women’s Law Group can help guide you through the ins and outs of estate planning. Think ahead today for an easier tomorrow.

2 Florida Women’s Law Group | (904) 241-0012

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