Financial considerations in retirement
Published on Apr. 12, 2023
Source: Nichole Huff, extension specialist for family financial management
We often receive financial advice about the importance of retirement planning but less about what to do with our money once retirement arrives. If you are retired or will be soon, here are some tips to make your money go further.
Create a budget. Knowing how much money you have coming and going is a simple but important concept. First, consider all income sources. This includes Social Security benefits, employer-sponsored benefit plans and personal investments for many people.
Next, review your monthly expenses. Expenses include those that are fixed, like a mortgage or car payment, as well flexible expenses like groceries and utilities. You should also consider annual occasional expenses, like birthday gifts or vacations. Costs associated with new or continued hobbies may fit into the occasional expenses category. A key to financial health is understanding and controlling where your money goes.
Compare income to expenses to make sure ends meet. This will let you know if you are on target when creating monthly and annual budgets that work for your retirement income. You may find, especially if there are rising inflation rates, that your retirement income will not last as many years as you originally intended. This could require you to reduce your spending in some areas or get a post-retirement job to generate additional income.
If you have a spouse, go through the budgeting process together and communicate regularly about your retirement goals and ways to meet them.
Being retired does not mean that you should quit investing. Continuing to invest during retirement could help protect you against inflation the rising cost of everyday living expenses like clothing and food—and ensure your money lasts as long as you think it will. Many different investment options are available to retirees, and like before retirement, what you invest in will depend on how comfortable you are with risk. Often the investments that carry the most risk are the ones with the most potential to have a higher rate of return. Talk with your financial advisor about your options and risk tolerance.
Extension offices often offer financial education programs for people of all ages. To find one near you, contact the (COUNTY NAME) Extension Office.
Educational programs of the Cooperative Extension Service serve all people regardless of race, color, sex, religion, disability or national origin.