Pondering a Journey in Retirement? Here's Some Guidance to Help You Plan Ahead
American retirees desiring adventure and travel might find their plans uncertain due to economic concerns. A survey by Edelman Financial Engines (EFE) reveals that nearly 40% of American workers aspire for an active retirement, while over a third express apprehension about the financial feasibility of their plans.
To navigate this dilemma, financial experts recommend a strategic approach to retirement planning. Isabel Barrow, a chartered retirement planning counselor with EFE, stresses the need to be flexible with work choices, considering part-time employment or temporary retirements. By doing so, individuals can balance their desire for adventurous pursuits with essential expenses.
Barrow also advocates for planning retirement in phases. Known as the "go-go," "slow-go," and "no-go" phases, each stage of retirement requires different financial strategies. The initial phase, often characterized by exploration and travel, necessitates higher expenditure. As individuals transition into the middle phase, they can balance travels with more affordable, community-based activities. In later retirement, healthcare costs and reduced mobility may require adjustments to the budget.
Budgeting is another crucial factor in financing an adventurous retirement. Financial planners suggest saving more than the standard eight times the annual salary, particularly for expensive activities. Utilizing annuities and reducing living expenses can also help reinforce financial security. Additionally, maximizing contributions to tax-advantaged accounts and engaging in cost-effective entertainment are other strategies to consider.
Robert Furst, a wealth management advisor at Merrill Lynch, emphasizes the importance of maintaining a cash reserve for unexpected expenses, such as medical costs or home repairs. Furst advises keeping at least six months of living expenses in cash, avoiding forced liquidation of investments during market dips.
By adopting these strategies, retirees can create a retirement plan that balances financial security with an adventurous lifestyle. Regular reassessment and adjustment of one's plan are also essential to ensure continued alignment with evolving goals and financial situations.
During the initial phase of retirement, when travel and exploration are prioritized, it's crucial to adopt a higher expenditure strategy. This can be achieved by saving more than the standard eight times the annual salary, ensuring enough funds for adventurous pursuits without compromising financial security.
Whether you're considering part-time work, temporary retirements, or planning retirement in stages, it's essential to incorporate tokens like annuities and efficient budgeting methods to finance your ico (ice) upon retirement – ensuring a balanced lifestyle that caters to both adventure and long-term financial stability.
