Retired? Don’t stop saving yet!
When it comes to retirement savings, a lot of emphasis is put on saving money leading up to retirement. But what happens after you retire? It’s important to know that your money will last as long as you need it to, so don’t throw your financial plan out the window just yet. Here are 5 reasons to keep saving after you retire:
1. Life expectancies are longer. One of the biggest reasons to keep saving after you retire is that you might live longer than you think, and you don’t want to outlive your savings. As you grow older, healthcare costs will rise, taking up a larger portion of your budget. Continuing to save well into retirement will help ensure you have the money you need for as long as you live.
2. You want to retire early. If you retire early, you will be living off your retirement savings longer. And that means your savings will have to stretch out even more. You may have budgeted enough to be able to cover your basic needs, but don’t forget to consider long-term care and rising medical costs over time.
3. Inflation. When you reach retirement, you may consider an overly conservative investment strategy. But if your investments are too conservative, dividends won’t be large enough to cover the rising cost of inflation. While there is no such thing as a no-risk investment, continue to grow your wealth in retirement with a well-diversified portfolio.
4. New or unanticipated costs. The longer you live, the more likely it is that you will require costly end-of-life medical treatment. And expenses can really add up in those last few years. Make sure you don’t run out of money and leave your family with the cost of caring for you. Also, other new expenses may arise. Perhaps the birth of new grandchildren has you wanting to put away more money for their future use. Plan to keep saving just in case.
5. Working after you retire. Retirement doesn’t always mean you stop working. By continuing to work full or part-time, you will be earning money that you can live off of, instead of using your savings or taking Social Security benefits. And that means you will have additional income to consider. Be sure to plan for future income the same way you would before retirement.
Continue to safeguard your finances even after you retire by checking in on your plan every year. You can adjust your investments in response to market performance, consider any changes to Medicare or tax laws and adjust your strategy to make room for new life events, such as births or unexpected illness. Make sure your money works for you as long as you need it to.