The concept of change often evokes different emotions in people and in my case, sends me into a tailspin. I’m experiencing such feelings now as I contemplate taking an early retirement Golden Handshake from my employer of almost 20 years. I am being forced to make a decision, and quickly. The exit date is scheduled for either June 1st or July 1st. It takes me that long to pick out a special occasion dress!
When faced with change and planning for the financial security of one’s family, fear and worry rear their ugly head. Right now I’m asking myself will retirement bring on serious financial problems, especially since I’m still strapped with a mortgage? The question that’s constantly in the back of my mind is can I really live on less income in retirement and maintain a secure,never mind comfortable, lifestyle?
Spending money during retirement essentially depends on what type of lifestyle you’d like to enjoy during your retirement gold years. In my case, my retirement would be considered “early” as I wouldn’t be eligible for Medicare since I’m still in my 50s. Retiring early can actually cause one to spend more money as a retiree. Those dream vacations and recreational leisure activities that my husband and I couldn’t enjoy when working a full time job may cause us to increase our spending habits now that more free time has opened up.
I have a sister-in-law who took early retirement at age 52 who has become a snow-bird and now escapes the harsh New England winters by spending part of the year in Florida. The current economic climate and real estate market has enabled her to purchase a second home down south.
Relocation to another section of the country as a way to lower the cost of living is another way to conserve precious funds and is frequently considered as an option by retirees. While I would enjoy leaving New England for a warmer climate, my husband is hesitant to move from the town we’ve lived in our entire lives. Relocation becomes further complicated when grandchildren live close by.
You can actually live on less as a retiree because you are spending less. I have factored into the equation that I will essentially be lowering the following expenses: commuting costs, weekly food costs – not grabbing lunch on-the-run when I was too rushed to bring it from home as well as saving on co-worker office celebration lunches and; wardrobe clothing costs for separate office and casual attire.
The amount of money that one would spend as a retiree is, of course, subjective and depends upon their lifestyle and career position.
As a retiree you can accurately access your financial decision by considering the following few things:
- Do you want to move or stay close to home? Where would you prefer to live when you retire?
- Are you physically fit or do you need assistance? Availability of specialized medical care should be a consideration in where you choose to live.
- If relocating, will you be looking for an area where you can pursue an active lifestyle, hobbies or special interests? Perhaps using your free time will enable you to do the traveling you might have always yearned for.
- Do you have investments? Will you be withdrawing funds from a deferred compensation or 401K plan?
- Do you have term life insurance or other insurance plans? Does your health insurance include out-of-network coverage?
- Do you have any debt to to settle, such as a mortgage or garnishments?
- Do you intend to leave an inheritance or trust fund to your heirs, or are you planning on spending it down?
- Do you have children, grandchildren or other family members you need to support?
Many mid-life baby boomers on the cusp of retirement are also part of what is known as the “Sandwich Generation” and are still supporting not only their children, but aging parents as well.
Realistically, retirement ideally implies fewer expenses, yet the recent economic crisis is putting a new spin on many of our plans. If impending retirement is in your crystal ball, a solid tip is to insure that you maintain a solid investment to draw upon when you retire. Make certain you are financially prepared for any crisis that may crop up.
Ultimately, the fate of your own retirement lifestyle is your own destiny. Your decisions alone will define whether or not you’ll be able to live on less once you retire. By making strategic financial decisions, you’ll be able to get a better handle of exactly what it is you want your future retirement and lifestyle to look like. You’ll be on your way to living out any retirement dreams you and your loved ones share.
Cindi is the author of Moomettesgram’s Musings WAHM tips, Moomette’s Magnificents Reviews, and Mama Mentor where she shares her personal musings and observations of a Baby Boomer Wife, Mom & Grandmother from New England. Follow @Moomettesgram on Twitter
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