While most Americans spend a great deal of time thinking about retirement and planning out their investments to make sure they enjoy their golden years, most people fall far short of those goals. There are simply too many distractions early in life, and too many ways that even the best laid plans can take a wrong turn. Even if you did everything right, changes in the economy and the cost of living can leave you with the scary realization that you’ll outlive your savings account. The fact that most traditional pensions are disappearing doesn’t help matters, and it’s often too late to do anything about it when you finally do realize you’re behind the eight ball. But regardless of how bleak it may seem, there is always a silver lining. The sooner you get back in action the better. So here are five tips to help you manage your income in retirement.
You won’t be able to decide on a plan of action until you fully understand the reality of your situation. So start things off on the right foot by performing a detailed cash flow analysis. Most people fall short of their goals because they don’t take the time to understand exactly how much money they need to maintain a comfortable lifestyle during retirement. You can get things rolling by making an easy calculation. If you can save around 80% of your pre-retirement income you’ll be okay. But that doesn’t leave much room for vacations and fun purchases. So take a look at your monthly expenses, and compare that number to the money you reasonably expect to take in each month during retirement. This is the baseline you’ll take action on from here on out.
