9 Ways To Overcome Financial Fears That Keep You From Retiring
If the thought of retiring makes you fearful because you’re concerned about your finances, you’re not alone. According to the latest MassMutual Retirement Happiness Study, 44% of pre-retirees feel anxious about how their finances will support them through retirement.
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“It can be natural to have some fear when you think about actually retiring,” said David Edmisten, CFP(r), lead advisor and founder of Next Phase Financial Planning, LLC. “Living without an income can seem risky. Worrying about what could go wrong could lead you to resist moving forward.”
Here are nine ways to combat the financial fears that are keeping you from entering retirement.
Remember Why You’ve Been Saving
Edmisten said, “First, remember that the reason you’ve saved for so long is to be able to enjoy the fruit of your good financial habits. The money you saved is intended to help you live a great retirement life.”
Give Yourself Permission To Learn
Edmisten said to look at the early years of your retirement as a learning period. “It takes time to adjust to a new lifestyle and new habits,” he said. “Give yourself permission to learn, grow and make changes.”
Maggie Tucker, podcast host of Inside Outside Money and an early retiree at the age of 41 with her husband, said, “The more you learn about your finances and how they will change going into retirement, the more educated and confident you will feel on this path.”
Tucker suggested reading books, listening to podcasts, reading blogs and watching YouTube videos.
“There’s a massive amount of free and inexpensive content out there to help you educate yourself and feel better as you guide your way through this transition,” she said. “There are so many high-quality and free resources out there; there is something for everyone.”
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Make Sure You Have a Solid Financial Plan
Edmisten said that having a solid financial plan is of the utmost importance to overcome your financial fears.
“Work with an experienced financial advisor who can help you determine how much you can afford to spend in retirement,” he said. “Ensure you have a clear understanding on how to withdraw your money effectively, how to save on taxes and what adjustments you may have to make to your investments or lifestyle. Make sure you have a strategy to provide immediate spending cash, income for the near-term, growth for the future and buffers in place for when things change.”
Consider Building a Cash Reserve
Edmisten said to consider building a cash reserve of 18-24 months of your planned spending in retirement before you retire.
“Having cash available provides funds readily for the first year or two of retirement,” he said. “It also helps avoid worrying about whether changes in the economy will throw off your plans. You won’t have to second guess your decision to retire if the stock market changes, because you’ve already set aside the funds to pay for the start of your retirement life.”
Have a Plan for Healthcare Expenses
Reagan Bonlie, founder of Nudge Money, said that healthcare costs in retirement can be significant, which can be a great source of worry. To alleviate your worries, Bonlie recommended researching your options for Medicare, supplemental insurance and potential long-term care insurance.
“Knowing you have a plan for healthcare can reduce anxiety about one of retirement’s most significant expenses,” she said.
Know How To Maximize Your Social Security Benefits
Bonlie also recommended knowing your options before you start taking Social Security benefits.
“Delaying benefits until age 70, if possible, increases your monthly benefit, providing more income over the long term,” she explained.
Consider Additional Income Streams
Another way to overcome your financial fears in retirement is to have some extra money consistently coming in.
“Look for ways to generate additional income streams,” Bonlie said. “This could be part-time work, consulting or turning a hobby into a small business. Not only does this provide extra money, but it can also offer a sense of purpose and fulfillment.”
Stay Flexible
Economic uncertainties are a part of life. Bonlie recommends being prepared to adjust your spending and lifestyle to match the reality of your financial situation.
“Flexibility can help you manage unexpected costs and market changes without derailing your retirement plans,” she said.
Leverage the Power of Community
Tucker said to surround yourself with like-minded people who positively motivate you and talk to them about your financial fears that are keeping you from retiring.
“Do not underestimate the power of community,” she said. “Community is oftentimes free, and it’s incredibly powerful. You get to make choices every day on whom you spend your time with, whom you surround yourself with, and what social media influences you allow in your life. Make good choices and build a community to support you and fight down your fears.”
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This article originally appeared on GOBankingRates.com: 9 Ways To Overcome Financial Fears That Keep You From Retiring
