Your Fabulous First Year of Retirement

In less catastrophic times, estate planning lawyers used to tell their clients to follow the four percent rule. They said that you can expect 25 years of retirement, and if you only spend four percent of your retirement savings per year, you will have enough to last the rest of your life. More recently, estate planning lawyers have started advising clients to expect the unexpected and therefore to spend less than four percent of their savings per year. People live longer than they did when the four percent rule went into effect. Furthermore, young people live in greater economic uncertainty and are more likely to require financial help from their retired parents. You have been retired for a year. Your math skills enabled you to have a career where you could retire with savings instead of staying in the workforce until enough body parts gave out that subsisting on Social Security benefits was your only choice. Therefore, when you look at your account balance, it is obvious that you spent much more than four percent of your savings. For help correcting course after a year of unsustainable spending, contact a Washington, D.C. estate planning lawyer.

The First Year Is Not Representative of Your Long-Term Retirement Budget

The good news is that your overspending problem will probably correct itself, at least somewhat, without you consciously making major changes. Some of the expenses that pushed you over budget in your first year of retirement are one-time expenses. If you bought a new house and moved out of your empty nest, this is probably the biggest purchase you will make during your whole retirement.

Managing your finances in retirement takes practice. Think about how much you overspent your budget the first time you got a paycheck from a salaried job. As carefully as you may have planned your budget, you will need to make some adjustments. Eventually, you will settle into a routine of frugality, especially since the needs of seniors are modest, and you are too old and too wise to waste money keeping up with the digital Joneses.

Feel Free to Front Load Your Retirement With Bucket List Items, as Long as You Budget for Long-Term Care

Whether you bought a new house or stayed in your empty nest, you probably have no intention of matching your epic retirement trip splurge every year. In fact, if you are going to engage in costly travel, the first year of retirement is the time to do it. If you are in good enough shape to go whitewater rafting now, then do it now; there are no guarantees that you will feel up to it when you are 80. Just don’t forget to buy long-term care insurance or hybrid life insurance.

Contact Tobin O’Connor Ewing About Long-Term Care Expenses

A Washington, D.C. estate planning attorney can help you enjoy your retirement and still have money left for long-term care and many years of good health.  Contact Tobin, O’Connor, and Ewing in Washington, D.C. or call 202-362-5900.

Source:

moneywise.com/managing-money/budgeting/i-spent-way-too-much-in-my-first-4-years-of-retirement