If you're retired, congratulations! You made it!
Now what? Many people don't know what to do with themselves at retirement. Sure, the new-found freedom is exhilarating, but what's there left to do?
In many ways, retirement is like having a new job. Your job is now to manage your wealth, your lifestyle, and to make this chapter in your life one of the most meaningful yet.
Here are some actions you should take to improve your retirement, whether you're newly retired or have been retired for some time.
1. Optimize your investments.
Unfortunately, the need for investment management doesn't end upon retirement. In many ways, it's a new beginning. If you worked closely with a financial advisor during your working years to save for retirement, continue to work with one going forward.
There are two big changes that occur in regard to investment portfolios upon retirement. First, contributions normally stop as many retirees don't have any income to contribute anymore. Se-cond, withdrawals from the retirement account begin in order to replace employment income.
In many ways, this is like putting the train in reverse. And, that's okay. This is why you saved for retirement in the first place: so the train would have some track to go down until you no longer need the income.
Where dollar-cost averaging may have helped you save for retirement, now reverse dollar-cost averaging is harming your portfolio. This can't be avoided without some form of active manage-ment, but even with passive management, it's really not that big of a deal unless you didn't save adequately for retirement in the first place.
So how do you optimize your investment portfolios? If you haven't already, it's a good idea to talk with your financial advisor about lowering your investment risk. This might mean transition-ing to a portfolio made mostly up of bonds, or it might mean getting out of traditional investing altogether and purchasing an annuity.
The truth is, there's no one-size-fits-all approach to optimizing your investments. The best ap-proach is determined by sitting down with your financial advisor who can analyze your situation and present appropriate options for your consideration as a part of your money management strategy.
2. Optimize your lifestyle.
Your investments are really just one part of the retirement equation. The other part has to do with lifestyle.
If you have been working hard all your life, and you retired with a huge sigh of relief, you might be tempted to inflate your lifestyle in the form of new vehicles, a second vacation home, or some other luxury.
Your financial advisor should know about any large expenses you are planning on purchasing, so they can warn you ahead of time if it appears you can't afford to withdraw such large amounts of money from your investment accounts.
With all of this newfound time on your hands, it can be easy to overspend. Instead, consider liv-ing a modest lifestyle. You might downsize your home, find less expensive hobbies, or eat better food (and less snack foods).
There's something about living modestly that's appealing to many people. Try it out and see if it improves your retirement. As a benefit, you'll save money and be able to live more within your means.
3. Show family members how to get the most out of their finances.
Teaching others is extremely rewarding. If you have a few family members, for example, who are struggling with their finances and you've done well with yours, see if they'd be open to your help.
You don't necessarily have to give them money, but show them how to manage it and improve their situation. I see so many young people struggle with simple money decisions that if parents took some time to educate them, many financial mistakes could be avoided.
For example, showing them how to setup a simple budget can set them up for financial success. Another example could be highlighting the need for life insurance. Perhaps they haven't started a retirement account yet and would benefit from learning about the Roth IRA. Or, maybe you could show them how to track finances.
Remember, the best retirement is one lived for others. Sometimes, people don't want advice, but when they do, be there for them. Having been there and done that, you have a tremendous amount of wisdom that's very valuable to younger folks. The smart ones will listen to you.
Final Thoughts
By maintaining your investment balance as much as possible and seeking out ways to save on expenses, you can have a much better retirement. But remember, serving the people around you is the best way to discover a fulfilling retirement.
Retirement isn't always easy, but one that's lived with care can be tremendously rewarding for you and your family.