Financial Planning Tips for the Newly Retired
Most of the people on this earth work for their entire life and keep saving money for the retirement. Once a person retires, he has no other source of regular income and thus he has to depend entirely on the savings. In order to ensure better management of the savings, a retired person should follow certain precautions. This post provides some useful financial planning tips for the newly retired people.
Make a retirement budget
If you have not made a retirement budget during your working years, you should do it after your retirement. It involves analyzing the total funds required to maintain the desired lifestyle after the retirement. Once you have made the budget, you will be in a better position to manage it. Remember, the budget also needs to be divided month wise and then category wise. After you retirement, you have to utilize your savings for maximum returns from various investment schemes.
Also include your social security income
If you are planning to avail the benefits of your social security income just after the retirement, you should include it in the budget too. However, it is strongly recommended to postpone it for old age as it will provide you even bigger checks per month. Again, the requirement of money is also expected to be more at that time as you will have to spend more on health related issues.
Pensions and annuities
In case, you are eligible to get a pension from your past employer, it should be included in the retirement budget. Similarly, if you own some annuity that provides regular income, it should be included as well. Having pensions and annuities is really a big advantage as it ensures regular source on income every month.
Generating income after the retirement
First of all calculate the total amount of money available through social security, pensions and annuities. Thereafter make a list of your expenses like rent, food, health and various other requirements. Now subtract the expenses from the total budget that you have through social security, pensions and annuities. The difference is the amount that you need to generate by making investments with your savings. Good news in this case is that even banks provide a higher interest rate for the old people and thus you can get good returns by depositing the money in banks. Obviously, if you have a lot of surplus money as savings, you can diversify the investment strategy.
An important thing to remember here is that the above mentioned tips should not be generalized to the whole mass of people. For instance, we can consider the special case of businessmen who do not get the benefits like pension but have good amount of savings. But even such a person needs to make a retirement budget as it will help him to maintain discipline in the financial life after retirement. I hope these simple tips will help you to lead a more secured and financially stable life after your retirement.
Are you interested to get more information on the author? Kim is a freelance contributor to the site term life insurance where you can get some useful resources when it comes to choosing your life insurance.