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Managing Your Income In Retirement

Managing Your Income In Retirement

By Susan Williams

When you’re working, you’re used to having a consistent paycheck every week but once you retire, this can change quite a bit.

Depending on how your funding your retirement, either a defined benefit pension plan, a defined contribution pension plan, self funded or government programs – one thing is for sure, it will be different.

Gary Foreman from The Dollar Stretcher  and Fifty Plus Finances joined us in this Learning Bites session to discuss managing your income in retirement. Here is our conversation;

These are some of the highlights of our conversation;

  • Fixed income is something that has pretty much disappeared for our generation. Previously, generations before us retired and lived on a pension and social security that provided a fixed amount of income each month. Today, up to 70% of retirees will have some additional forms of income – working longer or part time. There are many more opportunities to change our income stream then before
  • For the vast majority of people, their income will be lower once they retire that before they retire. Even if someone is working, chances are they will be making less and government programs pay much less than what someone was previously earning while working
  • Also with the move from Defined Benefit Pension Plans (DB) to Defined Contribution Pension Plans (DC) shifts much of the responsibility to the individual to manage their income
  • Most people should know what they can expect from government sponsored plans, they then need to ensure they understand what they will have from their pension along with what they have saved. This should give you a good understanding of what you have available for retirement
  • Experts often say it’s safe to withdraw 4% of your savings each year but you really need to figure out your budget to be sure
  • Some people believe that your expenses may decrease but depending on what your lifestyle and plans are for your retirement
  • Gary suggests that you look at your expenses and assess what will or won’t change. For example, will your housing situation change, will you still need two cars, are you planning on travelling more, what about hobbies and interests. Based on this you should have a post retirement budget
  • Also, be sure to plan for the unexpected and have a fund for this. For example, a house and car will require maintenance. You would be wise to have three to six months of cash available for emergencies or at least know how you could get access to this
  • As well be sure to remember that there are taxes on your income in retirement and these need to be planned for as part of your income as well

Also Watch: Expenses in Retirement – What To Expect

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Susan Williams is the Founder of Booming Encore. Being a Boomer herself, Susan loves to discover and share ways to live life to the fullest. She shares her experiences, observations and opinions on living life after 50 and tries to embrace Booming Encore's philosophy of making sure every day matters.