The economy has had a booming few years. But stagnant wage growth and lack of financial education mean many Americans don’t have as much saved for retirement as they would like. If you want to have the confidence you’ll have enough money to survive retirement, consider these tips.
Create a Retirement Budget
Managing your money doesn’t look that different once you enter retirement. Creating and sticking to a budget is essential to making sure you don’t run out of money. It can be harder to understand how much money you have coming in every month when you aren’t earning a paycheck. Look online for various calculators to help you understand how much to expect from social security and income annuities.
Plan for Taxes
Taxes can have a significant impact on your retirement cash flow. A thorough plan can help you minimize your liabilities while maximizing your income. It’s often best to meet with a professional to help create your retirement tax plan. The money spent is well worth it if they can reduce your taxes and help you avoid penalties.
Add to Your Investments
Most retirees expect to live for 20-30 years. This time horizon is long enough to receive great returns from continuing to invest in the stock market. A good rule of thumb is to have the income you need for the next 3-5 years out of the stock market to reduce your risk should a bear market come along. Otherwise, continue to invest in a portfolio of stocks, ETFs, and mutual funds that meet your risk tolerance. Dividend stocks are a great option for retirees since the quarterly dividends can be used as income while the stock appreciates in value.
No matter how much you have saved for retirement, a money management plan is key to making sure your money outlives you. Keep these tips in mind when creating your retirement strategy.