Managing Income during Retirement
Managing your income is always important, but it becomes even more critical during retirement, when your income comes from your savings rather than from wages and earnings.
Because your source of income - which you saved so carefully during your working years - is limited during retirement,
you need to ensure that it lasts through your retirement years. This means determining your income needs in the years leading up to your retirement and, once you retire, efficiently managing your retirement assets. In this article, we look at some issues you need to consider when doing these things.
Planning in Pre-Retirement Years
As the time for your retirement nears, there is always a chance that the amount you thought would be sufficient to finance your retirement years isn't. Reasons may include cost-of-living increases and lower-than-projected returns on investments. To help increase your chances of having a financially secure retirement, you should make frequent reassessments of your retirement income needs and sources during the 10 years before your projected retirement date.
The performance of the stock market in the 10 years between 1999 and 2009 is a good illustration of how potential retirees had to re-plan their retirement. For many, the market boon of the early 90s gave hope of a financially secure retirement. However, the subsequent market downturn resulted in a significant reduction of retirement assets, which forced many individuals near retirement to postpone their originally anticipated retirement date.
What to Do If You Don't Have Enough
If your reassessment of your retirement portfolio and current expenses reveals a shortfall in your savings, you may need to continue working beyond your anticipated retirement date. (For more on how to assess how much you will need for retirement and how much you have, see Fundamentals Of A Successful Savings Program.) However, should you decide to work, be cognizant of how your income could affect the amount you receive from social security if you are under the full retirement age determined by the social security agency.
Also, if you find you cannot retire as early as you planned and must keep working, you can try to decrease your extended pre-retirement period by re-strategizing. Basically, you need to increase the amount you save so that you shorten the time until you reach your goal. Here are some ways to increas
