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4 Retirement Investment Issues You May Have and How to Fix Them

4 Retirement Investment Issues You May Have and How to Fix Them

Many people can't wait for retirement, and most will spend a significant amount of time and money preparing for it. Yet, once the day arrives, your retirement investment plans can bring about some stress that you may not have anticipated. 

From having enough funds for hobbies to making sure your money is managed correctly, you are likely to experience a few money issues during your retirement. Luckily, most of these issues can be fixed with retirement planning and a solid investment strategy.

1. You Don’t Have Enough Income Saved

Planning how much fixed income you will need for retirement can be difficult. You’ll have to take into account how long you anticipate you’ll need your income to last and how inflation and unexpected bills may affect your annual budget. 

These days, people are living longer and social security funds may not always be enough to fill the needs of their retirement income. In fact, a more significant percentage of retirees worry that they may outlive their retirement funds.

The Fix: Consider Alternative Investments

Traditional retirement investments, such as a 401k plan should still be part of your retirement investment plan if available. But you should also consider alternative income streams and investment options. Think about things such as real estate and annuities, which can provide a steady income for several years. 

If you are a self-employed individual, you may also consider a solo 401(k). This investment strategy allows you to grow your money through alternative investments and high contributions that are not always available with traditional IRAs. Think through your investment objectives when making decisions about your wealth management for your retirement years.

2. You Have Unexpected Medical Costs and High Premiums

Once you reach retirement age, you will likely find yourself with more medical appointments and medication than you did in your younger years, even if you are relatively healthy. Along with aging comes a wide range of medical needs and sometimes some unpleasant and surprising medical costs.

Most estimates show that retirees will spend an average of $250,000 to $300,000 on medical expenses during their retirement. This is mainly for the cost of premiums and basic medical costs and screenings. 

That figure doesn't consider catastrophic illness, which can double and even triple that number. So, retirees will have to worry about saving for the basic costs of living in retirement and significant medical costs.

The Fix: Look at Insurance Options

High medical costs can quickly whittle away your retirement income, putting you in a poor position to sustain your lifestyle throughout the rest of your retirement. But with solid retirement planning it doesn't have to be that bad. Consider alternative investment options so you don't have to dip into your savings for all of your medical costs. 

Look into products, such as long-term care insurance, which can help cover some of the costs for long-term stays in hospitals and care facilities. If you have a high deductible health care plan, consider maxing out your health savings account. That will allow you to put some funds away pre-tax to help cover your deductible each year.

3. You Have a Hard Time Paring Down Your Budget (and Sticking to it)

One of the first things to do when approaching retirement age is to find a budget that works with your retirement income and stick to it. This requires reducing unnecessary expenses and getting control of overspending. That makes it so your income lasts longer. 

This may mean making adjustments to your current lifestyle. It may be hard when you have become accustomed to certain things. Trying to find the balance between what you can afford and what you want to do to enjoy your retirement can be difficult.

The Fix: Make Small Changes Over Time

Balancing your income with your expenses may be stressful. But, you may find it easier to do so by tackling one area at a time. Determine your ideal budget and then compare it to your current non-retirement budget. 

Start with one area that you think you may be able to reduce costs and see how low you can get in a month. Then move through each one until you find the best areas to cut and get to a budget that falls in line with your retirement income. To make sure you stay on track, record your expenses each month.

4. Deciding How to Spend Your Time (and Money)

Now that you're retired, what's next? While you may have dreamed of a retirement full of golfing, boating, and traveling, those can be expensive ways to fill your time.. 

Since you put so much planning into preparing for retirement, make sure you’re taking into account how much money your hobbies will cost you. By doing this, you will have a stronger grasp as to what funds you'll need in your account, as well as a better sense of direction.

The Fix: Make a Post-Retirement Plan

Help make your retirement a success and find ways to accomplish your retirement goal by creating a plan for the next phase in your life. Start with a wish list of all the big things you want to do in your retirement. 

This could be something like a list of desired places to travel to or include things like vacation homes you wish to purchase. You will then need to determine how much money you need to accomplish these goals and the steps to get there.

You will also want to make a plan for your day-to-day life in retirement. Do you want to fill your time with a part-time job doing something you enjoy? Maybe you want to spend some time volunteering for your favorite cause or charity? Or you could even fill your days with your favorite hobbies? 

No matter what you choose, it is essential to make a plan. When you have that plan, you can better figure out how much money you’ll need to actually save. 

Don't Let Retirement Investment Issues Get You Down

Keep your retirement worries at bay by staying on top of the retirement investment issues you may encounter. This can allow you to be better prepared for potential surprises, and make sure your retirement investment portfolio is ready. That way you'll have the funds to maintain your retirement, and will be able to continue to have a purpose and stay driven. 

Whether you are looking to supplement your retirement savings or are self-employed and can benefit from a solo 401(k), RocketDollar can help you get started. Reach out to our team to learn more.

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