Devising A New Strategy For Retirement

You’ve worked all your life and now it’s time to sit back and enjoy your golden years. Unfortunately, the stock market has left your retirement savings in tatters, the housing market collapse has robbed you of your equity, and the rumor is that social security will not have a cost of living adjustment for the next few years. Can you still retire? While it may not be possible to fund the same retirement plan you created in the good years, you may still be able to salvage enough of your retirement plan to create a new strategy that can still leave you able to enjoy your golden years better. This new plan may include reducing your discretionary expenses, finding an affordable retirement city, and maybe even starting a home business or taking part-time employment to make ends meet.

Review Your Finances

Typically, you will have some breathing room in your budget when you retire. Your income may be lower, but you only need to replace 80% of your pre-retirement net income to live the same lifestyle on a full retirement plan. However, you won’t necessarily want to live the same lifestyle because you will have more time, and fewer responsibilities. Many people like the idea of retirement, until they become bored and want to go back to work. Some retirees are happy going back to work part-time, and the longer you work, whether full-time or part-time, the less nest egg you need to have to maintain the same or similar lifestyle. In addition, home mortgages may have already been paid off, children have flown the coop, and this will naturally lead to a lower need for income during your golden years than during the height of family activities. Find ways to cut expenses and increase your income, if only substantially, to make your nest egg go further. One way to do that is to look at finding an affordable retirement city.

Retirement Havens

Retirees have been known to flock to places like Arizona and Florida. Some would say it’s the climate that draws them, but there are financial benefits as well. These areas tend to have good tax benefits. After all, whether you are withdrawing from a 401K or a stock market portfolio, you are going to start being taxed on that as regular income. You might have deferred the income to when it might put you in a lower tax bracket, but then you will still have to pay taxes on it. It isn’t just federal and state taxes that can take a bite out of that income, however: local sales, license, property taxes and even inheritance taxes should be considered when picking a retirement haven. The fewer taxes paid, the more of your income you get to keep. It’s that simple. Florida is as much a retirement haven because of the sunny weather as it is because they do not tax personal income on a state level.

A retirement haven isn’t going to be cost-effective if you don’t have access to good medical care. Find areas where there are local hospitals and universities to keep your body healthy and your mind sharp. A good retirement haven allows senior citizens discounts on these services that comprise a lot of their routine expenses.

Create Part-Time Income

Unless you want to spend the rest of your life on the golf course, starting a small side business can be a great way to add income to your retirement pot and keep you actively engaged in life. The key is to make sure you pick a home business with low startup expenses and low risk. Make sure the business risks are insulated from your personal financial portfolio, so that if you get sued, you don’t end up being personally liable at the time when you need that nest egg for retirement. However, there are many enjoyable hobbies that can be used to create a part-time income with the benefit of still being your own boss. Just be clear about the expenses this activity adds to your budget, from gas costs, to inventory and shipping costs. Doing business is a great way to stay active, but it can also be hard to make a profit the first three years. If you don’t want take on the risks, have no previous business experience, or just want straight income with no expenses, then choose to work for someone else part-time instead. Either way, you have the potential for another source of income during retirement besides Social Security, pensions, and your personal retirement savings.