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Looking ahead toward retirement, many people find themselves envisioning smooth sailing and a leisurely lifestyle. This is the ideal, of course, but it often comes along with a certain amount of financial responsibility. After all, those who are no longer actively working must be realistic about their shift in income, and this often means changing certain habits and lifestyle choices.
A comfortable retirement is possible, but it doesn’t come without a bit of effort. Here are a handful of financial habits that every retiree should adopt, regardless of how far into retirement they happen to be.
1. Develop a Budget
Developing and sticking to a budget is an important skill for anyone to learn, regardless of age. For retirees, however, it’s a veritable necessity. Overspending can be easy in retirement considering the fact that you likely have a fair amount of money saved, but it’s crucial to remember that your savings need to last. This is where a retirement expense worksheet can come in handy, which should be estimated well ahead of time and allow for your essential living expenses to be covered without dipping too heavily into your reserves.
Living without a budget is like walking through retirement with a blindfold on—you never know when you’re going to hit a wall.
2. Don’t Overlook Taxation
Taxes have a way of wiggling their way into someone’s retirement and causing headaches. This almost always occurs due to a lack of planning, however, which is why it’s important to adopt strategies that will help curb taxation throughout your retirement. This means coming up with a tax-efficient investment plan that takes advantage of multiple strategies to help minimize your tax responsibilities. This is an area best handled with the help of a professional financial advisor who can take a close look at your portfolio and develop a strategy for success.
3. Focus on Your Health
What do your diet and exercise regimens have to do with your financial future? Quite a bit, actually. Medical expenses can show up with increasing frequency as we age, and in some cases, they can be crippling to one’s retirement plan. While ailments can surely pop up out of nowhere and have little to do with lifestyle choices, issues such as heart disease and diabetes can be kept at bay by eating healthy, avoiding tobacco, limiting alcohol, and exercising regularly. After all, your health is your greatest wealth—literally.
4. Reevaluate Expensive Spending Habits
Everyone has a habit or two they’d like to change, and for many, these can affect finances. Expensive spending habits, such as dining out too frequently or shopping compulsively, can be difficult to alter, but they can also derail your retirement if you’re not careful. Those who are approaching or have just entered retirement can get a lot of mileage out of taking a closer look at how they spend their money and adjusting to correct poor choices. It might mean cooking at home more often or limiting entertainment costs, but in the end, your savings will thank you for your diligence.
The freedoms of retirement are real, but they come with an equal amount of responsibility. By adopting new financial habits, you can enjoy the peace of mind associated with smart retirement planning.