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Preservation
Plan for an easy retirement

OVERVIEW

If you’re on the road to retirement or already there, it’s crucial to think about protecting what you’ve saved and the steps you should take to ensure that you’ll have enough income to live comfortably throughout your retirement. After working so hard to get to retirement, you deserve to enjoy it without having to worry about money.

After working so hard for so many years, you’ve earned your retirement.

And if you’re there already, or are just getting to this new life stage, it’s crucial to think about protecting what you’ve saved and the steps you need to take to ensure that you’ll have enough savings to live comfortably throughout your retirement.

As advances in medicine and technology continue, today’s healthy 60-year-olds could have a chance to live well into their 80’s and beyond. That’s why you should also consider planning for a retirement that surpasses the next 20 years so that you can be better prepared for your future.

Plan for a Debt free retirement

It’s a smart financial move to keep your expenses down when you’ve retired, but often it can be a process that is easier said than done.

As a start, you can make a list of all your debts and expenses, and then rank them from the one with the highest interest rates to the lowest. You should then always aim to clear off the debts with the highest interest first and make your way to the ones with the lower rates. Eventually, you’ll be able to reach the goal of being free from your debts.

For example, paying off any mortgages you may have before you retire can give you the peace of mind that you've already paid off what is traditionally a large expense [or debt]. Then, you can retire knowing full well that all you'd need to pay moving forward are your smaller loans.

Diversify your investments

Build a diversified mix of stocks, bonds and short-term investments according to your overall financial situation and how long you are looking to invest for. This way, you have a higher chance to get the kind of growth you’re looking for.

As you get closer to retirement, you’ll want to lessen exposure to riskier holdings that tend to be more volatile. This is why working with a financial planner is important to determine the asset allocation which works best with your age and investment objectives.

Don’t withdraw too much from savings

You would be putting your retirement savings at risk if you spend your savings too rapidly.

  • Consider using conservative withdrawal rates for any money needed for essential expenses.
  • Practice self-discipline in your spending habits by withdrawing no more than 4% to 5% from savings in the first year of retirement and adjusting that percentage for inflation in the subsequent years.
  • By planning your withdrawal rate, you won’t have the need to liquidate your assets simply to pay the monthly bills. This is especially troublesome if the economy and market aren’t doing well.

Have savings on hand for emergencies

It’s a good idea to keep at least 12 to 18 months’ worth of expenses in cash or cash equivalents. While most of your expenses should level out when you retire, you should always be prepared for a big expense that may come along unexpectedly.

Consider keeping funds in a separate checking or savings account that you can easily access as you’ll want to avoid reaching into your long-term savings as much as possible.

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