Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand.
Why You Should Consider a Financial Advisor to Map Out Your Retirement Spending
Given the number of years that the average person spends working and saving for retirement, it is not surprising that most people want to embrace all the free time they suddenly have once they stop working. Before you begin traveling and diving into all those activities you’ve always wanted to find time for, however, one of the smartest things you can do is to meet with a financial advisor.
While the average retirement lasts for roughly 18 years, depending on your individual health there is a possibility that you could live for as many as 30 years or more as a retiree –and it is highly unlikely that the money you will receive from Social Security will cover the costs of your pre-retirement lifestyle (assuming Social Security still exists by the time you retire, if it’s not within the next few years). An experienced financial advisor can not only help you determine how much of your savings you can actually spend each year, but at what point in your retirement you should consider things such as gifting assets to children and grandchildren.
One of the biggest mistakes made by newly retired individuals is spending too much of their savings too quickly on things such as travel and entertainment. While you should definitely be able to enjoy yourself and your newfound free time, it is important not to take too big of a chunk out of your retirement savings too early on. On the flip side, it is equally important not to wait too long to begin gifting assets, as doing so can mean the need for your children to spend down your entire estate in the event that you eventually find yourself in need of long-term care such as a nursing home.
Just as budgeting is important for planning for retirement, it is equally important for mapping out how you will spend the money that you’ve saved –on everything from healthcare costs, to ordinary day-to-day expenses or more enjoyable spending such as travel and entertainment. Far too many people underestimate how much money they will actually need to spend each year in order to maintain their pre-retirement lifestyles, let alone to add in more travel and entertainment costs for their newfound free time. Not only is it important to map out how you plan to spend your savings, it is equally important to keep track of where you are actually spending your money and to see if that spending matches what you initially planned. The earlier you identify a mismatch between your anticipated spending and your actual spending the better off you will be in the long run.