Covid-19 has changed the way some people will go into retirement and change what they do after the ceremony is over.
When retirement gets close, potential retirees have to take a close look at their financial situation and options to ensure a happy and successful retirement. This is especially important since many retirement age workers may not have a job when they retire.
As a practical matter, retirees have to plan for retirement income and unexpected things that might just pop up. Both are worth considering to help ensure that enough income is available to retire independently and successfully.
Most retirees will have a fixed income. Unexpected events, such as an expensive car repair, a house repair or a medical expense can take a large chunk of that income or savings and cause a large amount of stress.
Option One: Get as debt free as possible.
It’s hard to plan for unexpected events, and it’s a lot easier to plan ways to increase retirement income. The ultimate goal is to have enough income to take care of your living expenses and be able to save a little.
One of the best, but not always the easiest, ways to increase retirement income is to eliminate debt that’s carried into retirement.
Retiring debt free provides an income buffer but getting out of debt is easier to say than do when it’s hard to just keep up with the cost of living. Becoming debt free may not be entirely possible. Taxes, housing and insurance costs will always be with us, but eliminating as much debt as possible will definitely put more money in your retirement pocket. There’s a lot of information available on this website that can point you in the right direction.
What we did.
I did a lot of research and reading. About a year before I retired, we took a look at our total income and expenses to figure out how we could eliminate or reduce unsecured debt while I was still working and we had the income to make it happen. We made a plan to pay off high interest debt, starting with the lowest balance. We wanted housing to be our only debt moving forward.
When that was paid off, we moved to the next debt with the lowest balance, but increased the amount we were paying on both debts. Then we repeated the process until all our unsecured debts were paid.
How to eliminate debt!
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A few simple ideas may help you streamline your time, orchestrate your finances, and cut back the stress of debt and total money matters.
If you’re willing to become organized, you will be able to pay your bills paid promptly without worrying about late charges.
This little book can help you learn how to streamline your time, organize your finances and cut back on the stress of debt. You’ve heard all this stuff before, but sometimes it helps to look at the information again. There’s a lot more free stuff available for the taking.
Check out the free stuff about managing debt here!
Option Two: Continue working after retiring.
The latest and greatest retirement option for most people will be to keep working after they retire. This will be part of the retirement portfolio for many people who are reaching the retirement point in their life.
There are lot of reasons people choose to work after retirement. Check out “Why People Retire and Then Keep Working” for some of those reasons, mostly from my perspective as a retiree.
Most retirees are on fixed incomes and some of our retirement income may be in the form of a paycheck. That’s just a fact of life and there may not be much we can do about it.
My Conclusion
The ideal situation would be to retire debt free. That gives us the best opportunity to have enough money to pay for the essential things like housing, food and medical care. With a little luck, there may be a little left over for savings or an occasional vacation.
The reality is a lot of us will continue to work in retirement. The trick then will be to find something we enjoy doing to supplement our retirement income.