M is for Money Habits for a Lifetime and How They Affect Retirement.

We all have “money habits, ” and most have specific practices to help us acquire what we believe will bring the happiness we desire. The ultimate goal for many is to save enough during our working years to enjoy retirement.

Have you considered what happens when we go from working and saving to retirement and spending? How does our lifetime of money habits work in this new phase of life? It can quickly become a tricky situation to navigate when we no longer have income but are spending down our life’s hard-earned nest egg.

We may panic and not spend enough during our golden years, leaving us discontented and living a life we neither foresaw nor imagined. So how do we learn to balance spending and let go of the habit of regularly saving without inducing anxiety and fear in our lives?

  • The first rule should be – know the differences between being extravagant vs. frugal and avoid becoming miserly.
  • Start to re-frame your thinking of only spending income and not dipping into principal. If you have a difficult time with this and are fortunate enough to have a stock portfolio with a large enough dividend payout, you may be able to supplement your Social Security benefits with your dividends. Or capital gains can be used as income in this low-interest rate environment. This can help alleviate your conundrum.
  • Don’t try to increase your income by dramatically changing your investment strategy– this can backfire!  You could raise your risk exposure with less asset allocation diversification.
  • Do speak with your financial advisors and have them assist you in making a solid retirement plan which replaces your income stream.
  • Plan that trip today while you still have a healthy body and mind.

Remember, it’s not only money that brings happiness. Identify what creates the most joy in your life, so that you can enjoy those retirement years. Talk to your financial advisor, as the things you enjoy may not even make a dent in your retirement savings. Being informed can allow you to relax and appreciate all you have so that you can start enjoying your retirement today.

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About Ann Zuraw

Ann Zuraw, the voice behind "Chicks, Chat and Change", is a Certified Financial Planner (CFP®), Chartered Financial Analyst (CFA®), and Certified Divorce Financial Analyst (CDFA™).If you have comments on this post contact Ann Zuraw

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