Retirement Financial Considerations

March 7, 2010

Financial independence is just as important as physical independence. While you need to take steps to ensure that you are able to take care of your physical needs, the same goes for your money. Here is some advice to staying financially independent during your retirement years.

There are many things that can happen in life that can rock our financial world. Even if you have a cushion built up, nothing is for certain. Just ask those who invested with the stock market or other investors before the financial crisis erupted. What you can protect is your good name and financial standing.

This means your credit standing. Even when money is low, a good credit score and history can buoy you up in the interim. It is a perk that we can all have if we take a few notes.

The first tip is to have a budget in place. When you make that decision to retire finances can be crucial. You are losing one income where once there were two.

Before the time comes, live according to your newly amended budget. Cut entertaining to a minimum, limit eating out, lower utility bills and find other ways to save money. These are all examples of ways you can test your budget to see how well you can manage on less.

Before the final decision is made, carve out the basic structure of a budget. You will learn what bills occur on a monthly basis: car payment, insurances, mortgage, grocery bill and utilities. Tally up how much money you will need to have on hand for the essentials.

It has long been recommended that the average family create an emergency fund. This fund can then be used for car repairs or unexpected expenses that crop up. Three to six months’ expenses for you and your spouse is the usual recommendation, however you may want to consider 12 months when you first retire.

Next, curb credit card spending. When you are short of money is not exactly the best time to run up the credit cards. It can add another financial burden to an already stressed budget looking for money.

Being proactive will help you to protect your credit to weather the changes in your lifestyle. After all, good credit will benefit you in the long run and open doors that would otherwise be closed if you were to suddenly fall on hard times and have trouble making ends meet.

Most people worry about their credit history. Like we said before, a good credit rating can make all the difference in many situations. If you know that money will be tight in the near future, do all you can to lower high interest rate bills, specifically credit cards. Placing emphasis on them can help you lower the bill or pay them off altogether before one spouse leaves the workforce.

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