If you started saving as soon as you got out of college, had a stable job throughout your career and lived below your means all your life, you have likely amassed more than enough to live comfortably for the rest of your life. However, many people who did everything right still feel nervous about leaving their steady paychecks to retire because they are still wondering whether they will outlive their assets. Here are some tips to overcome your retirement worries:
Understand that it’s normal to feel the jitters. Fearing the unknown is perfectly normal. A nine-to-five job has been your identity for much of your life, and it’s OK to feel awkward when you are giving that up. In fact, it may take some people a bit of time to adjust to the post-work routine, even if retirement is awesome. The good news is that retirement surprises can be positive as well as negative. Perhaps retirement will be even better than you think it could be.
Re-run the numbers. Knowing the numbers make sense on paper doesn’t squash all worries, but seeing how your careful planning will help you for the rest of your life does help. You can do the financial calculation several different ways and plug in a few worst-case scenarios to reassure yourself that your finances will weather sudden shocks. It could also be worth it to have an expert review your financial projections if it helps you to sleep better at night.
You can always become more conservative if you need to. Diligent financial planners have probably already shifted some of their nest egg into more conservative investments in the years leading up to retirement. If you plan to withdraw 4 percent of your initial retirement balance annually, your portfolio has an extremely good chance of lasting the rest of your life. However, if you shift to a 3 percent withdrawal rate, it will give you even more security. You can also withdraw less in years when your investments perform poorly to help them recover faster.
Try to diversify your income streams. Your finances will be more secure if you don’t have to rely solely on your stock and bond portfolio. You could get a part-time job, make money from your hobbies, annuitize part of your wealth or sign up for Social Security payments. Making even a little bit of money from another source can help ease your worries about running out of money.
Find something else to occupy your time. Our mind works in mysterious ways sometimes. You’d think that the more we think about a problem, the better our solution will be. But sometimes the more we think about our assets, the more we are tempted to tinker, which often triggers unnecessary taxes and fees. In retirement, try to spend less time worrying about your finances and start enjoying the fruits of your labor.
Get to know more people who are retired. Most people who are retired are doing OK. Not everybody can afford to spend a lot of money, but they have time to spend how they like to. Whether or not you are happy has little to do with how much you are able to accumulate beyond a basic standard of living. Don’t let your emotions overrule your logical calculations that you are likely to have enough money for your retirement expenses or dampen the potential to have fun in retirement.
Eliminate as many recurring payments as you can. With interest rates so low, many people are taking out large mortgages in hopes of earning a higher return elsewhere. But for retirees, theoretical outcomes are pointless if it means losing sleep over the possibility of failure. In fact, it’s probably not worth the anxiety even if investing the money you borrow is guaranteed to win out financially. By reducing your cash flow needs, you will need to take less from your portfolio and it will help ease the worry of withdrawing money from your savings too quickly.
David Ning is the founder of MoneyNing.com .
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7 Ways to Deal With Financial Anxiety Before Retirement originally appeared on usnews.com
