Archives for January 2017

For every five years longer a retiree lives, he or she spends about 15 percent less on average. This means that people in their 70s spend about half of what they do in their 50s. Even with the ramp-up in medical expenses that often comes later in life, retirees still tend to spend less as they progress through what is termed the three phases of retirement.

One study found that nearly 40 percent of retirees spend an above average amount on food and beverages (“foodies”), 30 percent tend to spend more on home-related expenses (“homebodies”) and 5 percent are travel enthusiasts (“globetrotters”).

These are some categories by which to measure your own spending objectives in retirement, as they can help you establish a retirement income withdrawal level that can help meet your lifestyle goals, but note that they may also curb downward and change as you get older.

While identifying the typical spending behaviors of retirees can be helpful when considering your own retirement income, every person’s situation is different. For example, someone who experiences a health care issue early on may find that their lifestyle spending decreases faster than a retiree who is a foodie or homebody.

Retirement should be a time to take a long-needed break — from working, from worrying and, hopefully, from scrimping and saving. You hope to be in a place in which you can spend for what you need, plus a little more now and then for your passions, whether that’s golf, the grandkids or the Grand Caymans.

As you build a financial strategy, consider each component. It may be effective to diversify your income sources among an array of sources, such as Social Security, pension and an annuity, along with options that may provide growth potential to generate cash flow to help pay for discretionary living expenses.

This calls for reviewing a number of factors, such as when to begin drawing Social Security. Recognize that each spouse may benefit from a separate strategy. If you have an employer-sponsored retirement plan, review plan rules on partial distributions once you’ve retired, as some can be quite restrictive and may require repositioning of those assets.

Before you finalize any distribution strategy, carefully review the tax status of each account you own to determine when to withdraw money so that you don’t tip yourself into a higher tax bracket in any one year. You should talk to a financial advisor and tax professional about how to create a tax-efficient retirement income distribution strategy. 

 

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

Studies show some people simply are wired to wake up early in the morning while others are night owls. The difference has to do with what time of day you have the most energy, focus and creativity.

One researcher aimed to change his night owl ways by waking up early and forcing himself to work out and get a dozen things done by 8 a.m. In the end, he determined early risers aren’t necessarily more productive, they just get stuff done earlier in the day.

There are a couple of tips that could help your productivity, whether you’re an early bird or night owl. First of all, don’t work against the grain; try to create a work schedule that accentuates your most productive hours during the day. For example, night owls may be more productive if they plan their daily workload the night before.

Second, “time block” what you want to get done and at what time of day. This means responding to emails and making calls during your least productive time of day and scheduling projects that need more time and concentration during your most focused time of day — even if it’s late at night.

And finally, if you employ a to-do list, break it up into two columns: “now” and “later.” The now column is for things you must absolutely get done today, and later is for tasks to complete at some point during the week. This saves you from having to rewrite the same tasks (that never get done) every day and helps ensure they get done by the end of the week.