For retired people or those nearing retirement, there can be less opportunity to “save more” as part of retirement planning. After all, retirement is supposed to be about working less, not more! Since working less usually means earning less and therefore saving less, it’s important to focus on good investment planning.
Here are three planning ideas to consider when planning for retirement.
1) Consider a Strategy to Increase Your Social Security Check
In previous blog posts, we’ve written about strategic ways to defer Social Security so as to enhance the size of your benefit checks. Two such strategies are the Restricted Application for Spousal Benefits and the File and Suspend Strategy. Click on the links to learn more.
2) Consider Your Entire Time Horizon When Choosing an Asset Allocation
If you and your spouse have long life expectancies, it means that you’ll potentially need your assets to work for you over a long period of time.
With this in mind and where appropriate, investors who have longer time horizons may want to consider a longer-term growth strategy with more equity exposure, which may carry more risk than a conservative approach to investing. With more risk often times comes more reward over time, if you’re able to endure volatility along the way. It’s a tradeoff that is different for everyone and should be considered carefully with the help of a financial advisor.
3) Be a Mindful Spender
There may be years during retirement when your portfolio doesn’t perform as well as you’d like, and you may even experience negative returns. It could be smart in those years to do what you can to curb spending, so as to mitigate the negative impact on your portfolio principal where possible.
When considering your spending habits in general, it’s important each year to distinguish those things that are necessary expenses, versus those that are more discretionary. Make a list. If each year you sacrifice a few of the things on the list that are the least important, it could add up over time.