Top Ways to Avoid Financial Anxiety in Retirement
Updated on Apr 22 2019
As retirement approaches, many people begin to feel anxious about the major life change. Here are top tips to help you get organized for a successful last third of your life.
Aside from growing older, people approaching retirement often become anxious thinking about leaving a lifestyle, leaving the workforce, and having enough money to cover expenses in retirement. Generally speaking, anxiety comes from fear - fear of the unknown and fear of failure. But, retirement does not have to cause anxiety.
If you take the time now to plan and ensure financial security in retirement, it can be a fun and fulfilling experience. Learn top ways to prepare for retirement today to avoid financial anxiety in the future.
5 Tips to Avoiding Anxiety in Retirement
1. Conduct a Financial Assessment
Knowing where you are going always has to start with knowing where you are. You absolutely can not start a sound retirement plan without an honest financial assessment of your current financial situation. Consider your investments, any retirement income you may receive, your debt, and your current expenses to create a holistic (and honest) account of your finances. This can help you understand your debt to income ratio and anticipate financial changes in retirement.
2. Pay Off Debt
After knowing where you are and what debt you have incurred, prioritize paying it all off before retirement. This includes credit card debt. Do not put more on your credit card than you can pay off in a month. Try to pay off any other loans, such as auto loans, mortgages, and student debt that will detract from a fixed income in retirement. The more freedom you can have with your money, the better.
3. Forecast Future Living Expenses
Create a monthly budget for your current expenses and think through how those expenses may change after retirement. This is your time to dream big! If you can get control of your spending, you can plan for a better lifestyle in retirement as you will accumulate more savings. What do you want your retirement to look like and how much will it cost to get there? Will you stay in the same house or will you rent a smaller flat in the city? Does your retirement include travel? If so, how does that change your living situation and monthly bills? These are all questions you should consider to plan for your future.
4. Have a Plan for Unexpected Costs
We can never know what the future holds but we can have an emergency fund ready to cover some or all of the costs of an unexpected expense. This includes health care and medical costs. How will you pay for long-term care or home assistance, if needed? What will Medicare cover - and what won’t it cover? Think about long-term care insurance and what’s best for you.
5. Contact a Fiduciary Financial Advisor
Enlist the help of a trusted and well-trained professional to help you work through these issues. When it comes to financial planning, it is always helpful to have another trusted set of eyes on your planning. Fiduciary financial advisors are legally bound to put your interests first, above their own. They can be a priceless resource in reducing financial anxiety in retirement and even see missed investment opportunities, spotting ways to increase income in retirement.
We all have anxiety and concerns about what our financial future holds. However, by taking an honest look at our finances and anticipating change while working with a trusted financial advisor, anxiety can be relieved. Fears can be rested and retirement can be enjoyed!
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