If you’re getting to the point where you’re going to be retiring soon, there are all kinds of things that you’re going to want to be doing in order to prepare for this change in your life. Arguably one of the most important things that you’ll want to do is to take a look at your budget and see how you may want to be adjusting things so that, when you’re ready to retire, you’re financially able to do so.
To help you in doing this, here are three ways your budget should change as you get closer to retirement.
Make Retirement Your Top Financial Goal
In previous years, when you thought about your budget and where you wanted to allocate your money, retirement likely wasn’t the top priority. Your priorities may have started off with things like paying your bills on time, saving for a home, saving to send your kids to college, taking family trips, investing in other areas, and so on. But now that you’re fast approaching retirement, you’ll want to make sure that you’re giving your retirement the funds it needs so that you are able to retire.
To do this, you may want to move some things around in your budget so that more of your money is going into retirement savings and investments. If this means that you’ll have less money to play with during the month and spend on excess things that you want, so be it.
Consider Each Stage of Retirement
As you’re preparing to have enough money for retirement, one thing that you’ll want to consider is what each stage of retirement might look like for you and what you’ll need to be able to afford your life in each stage.
For example, when you first retire, you might still be fit enough to want to travel a bit, so you’ll want to have the money to do that. Later on, you may be a bit more homebound and have some health issues, which will want to have the money to pay for. And after that, you may need to move into assisted living to supplement your care, which can be expensive and you’ll want to have the funds to cover. So as you’re planning your retirement, make sure you’re thinking about all of these stages.
Take On Less Risk
Investing money into your retirement early on will help ensure that you’re able to meet your financial goals. However, as you get closer to retirement, you’ll want to consider pulling back on some of the risks of your investments to ensure that you’re not losing money that could be safely tucked away into your retirement accounts. So if you’ve invested in more risky vehicles previously, try to put future investments into something a little safer.
If you’re going to be closing in on retirement soon, consider using the tips mentioned above to help you see how you may want to adjust your budget in the years leading up to this transition.
