Should Your Financial Plan Retire When You Do?

When you retire, will you spend your time worrying about your financial situation or enjoying yourself?

When a newly retired couple recently visited my office, they gave me a rundown of their recent expenses. These included traveling, buying gifts for their children, and membership dues to various organizations. They worked hard, had successful careers, and now wanted to enjoy their golden years as much as possible.

The only problem was that they were spending too much! Even though they carefully planned and saved during their working years, being confronted with free time all day, they were blowing through their carefully prepared retirement budget.

Having a financial plan is important during pre-retirement years, and perhaps even more so during the retirement years, where most people live on a fixed income, based on their investments and pensions. Working folks, when they are a bit short, have the option of cutting spending or increasing income. Unfortunately, for various reasons, many retirees don’t have the option of increasing their income, and therefore they need to make sure their spending stays within their retirement budget (pensions + investment income + possible withdrawal of principal).

People are living longer these days, and average lifespans will likely continue to increase. While you don’t need to lead a Spartan existence when you retire, you still need to be careful to live within your budget.

Follow the plan

The secret to a successful retirement is conservative financial planning. Start planning for retirement as soon as possible.