- Written by Alan Becker Alan Becker
2020 has been a tough year for nearly everyone, and that may be especially true for retirees and those nearing retirement who are suddenly worried about whether their careful planning and years of saving could be upended by events beyond their control.
After all, retirement is supposed to be a pleasurable and satisfying time when you kick back and enjoy the fruits of all those decades of labor.
That’s difficult to do if you’re jittery about a volatile stock market or you fret over every expenditure because you aren’t sure whether your savings can go the distance in a lengthy retirement.
As we begin 2021, plenty of people still have worries. For them — and maybe for you — the future is uncertain. But frankly, the future is always uncertain, and worrying about your finances without taking charge of your situation does no one any good.
So, if you’re already in retirement or plan to be there soon, how can you reduce some of that financial stress that’s weighing you down in these tumultuous times?
Let me offer a few ideas:
Take control. Just stewing and letting the emotional strain rule your days and nights does no good. Instead, focus on actions you can take to help reduce some of that stress. Often, just doing something — anything — can help you feel better.
Review your financial assets so you truly know where you stand. Those assets might include savings accounts, investment accounts, retirement accounts, life insurance, real property, or other items.
You can’t create a plan unless you know exactly where you stand, so taking stock of things should be the first step. That way you aren’t operating in the dark.
And what about the “T” word? Taxes! Have you imparted tax efficiency as a part of your retirement plan? Do you know your options when it comes to this certainty?
Reconsider the timing of your retirement. Whenever the economy is shaky, it’s best to consider your options ahead of time so you can be prepared before problems arise.
If you’re still working, for example, and you suddenly lose your job, one option may be to retire earlier than you originally planned and take Social Security.
That can come with downsides, though. If you begin drawing Social Security before your full retirement age (between 66 and 67 for most people), you receive a reduced monthly check. That could cost you tens of thousands of dollars over a long retirement.
Conversely, if your job situation is stable but you’re worried your nest egg is inadequate, consider postponing retirement. That will allow you to save more and potentially increase your Social Security benefits and can potentially give your investments time to recover from temporary market declines.
Review your budget and clean up bad habits. Many of us have less-than-stellar financial habits that we developed over the years.
Those patterns of behavior don’t magically disappear as you approach retirement. You need to be intentional about changing bad habits so you aren’t spending more money than you need to — or should.
To help you determine the difference between necessary and discretionary spending, review the past six months to a year of expenditures.
As you review your spending, think beyond all those momentary, one-time splurges. Include your regular household bills, such as utilities, cable, and cellphone service. You might be able to save money through a family plan, by bundling services, or by cutting the cord altogether.
Evaluate the risk in your portfolio. Perhaps you have had an aggressive investment strategy, and that’s how you accumulated a big nest egg that (you hope) was designed to carry you through decades of retirement.
But, in an uncertain market and with retirement already here or close at hand, it may be wise to reevaluate how much risk you’re holding in your portfolio. Now would be a good time to diversify and consider other investment options so you can help protect what you already have.
Remember, though, that if your unsteady financial situation is getting the better of you, you don’t have to go it alone. Find an experienced financial professional who can help you develop a plan that can potentially ease at least some of your worries.
It’s possible to get back on track financially — and, hopefully, set aside those concerns that could mar your enjoyment of life in retirement.
Alan Becker is president and CEO of Retirement Solutions Group (rsgusa.net) and author of Return on Investment or Reliability of Income? The True Meaning of ROI in Retirement. He is an investment adviser representative, has passed the Series 65 securities exam, and is insurance licensed in multiple states.