You've made it to retirement, now the question is whether you have the money to truly enjoy it?
One of the first things the newly retired should do is determine if the retirement nest egg they worked long and hard to amass will sustain them until their final days.
Nearly all financial planners offer free initial assessments that give an individual an idea of how long his or her's existing assets can support their lifestyle. Most financial institutions offer do-it-yourself worksheets that accomplish the same task.
For those that have enough money, the rest is easy.
"If you've got enough, spend the surplus on fun stuff," said Will Rogers, a planner with American Express Financial Advisors. "Your family does not want to remember your dollars. They want to remember the good times they had with you."
As the old saying goes, you can't take it with you. It's not even worth trying either: Anyone who dies with more than $675,000 is subject to estate taxes, giving Uncle Sam a 55 percent slice of whatever you have earned.
Mr. Rogers' philosophy on retirement spending is shared by one of his clients, Joe Lumpkin. The 62-year-old North Augusta retiree from Savannah River Site takes frequent vacations with wife, Doris, and their children and grandchildren.
"You want to be conservative," he says. "But you want to be able to enjoy what you've worked for. People from my generation, it's kind of embedded to save, save, save. It's hard to break that habit."
Most financial planners recommend retirees keep their assets in two accounts: one that contains "core" retirement assets that will provide sustainable income throughout the retirement years; the other containing assets that can be used for discretionary spending.
For those who discover their nest egg isn't quite enough, the solution is simple: Either find a way to spend less money, or generate more income.
The latter may mean changing your investment strategies to generate higher returns or taking a part-time job. If your assets are in low-risk, low-return investment vehicles, such as CDs or bonds, you may want to invest in higher return equity investments.
"Most people, even retirees, have a long-term time horizon," said Steve Marbert, a certified financial planner with Richard Young Associates. "Retirees can easily be in an aggressive portfolio if they can tolerate the risk."
Many financial planners recommend retirees who discover they will need a little extra cash to take a part-time job to supplement their incomes. Some retirees, regardless of their financial situations, seek employment to stay active or maintain their social lives.
However, retirees must be careful not to let their employment compromise other forms of income, such as Social Security benefits, which get reduced as the individual's wage income increases.
Retirees under 65 can earn up to $10,680 a year without losing any Social Security benefits, said Carolyn Cheezum, a spokeswoman for the Social Security Administration.
Ms. Cheezum said the year you turn 65, your earnings limit is $25,000. Any earnings beyond that will decrease your Social Security benefits by $1 for every $3 earned.
After age 65, everyone gets full benefits regardless of earnings. The law eliminating earnings limits for people older than 65 was signed by Bill Clinton in April 2000, retroactive to January 2000.
By the numbers:
$102,000: Average retirement nest egg ($122,000 for men, $78,000 for women)
33: Percentage of Americans who fear running out of money during retirement
29.5: Age most Americans begin saving for retirement
21: Percentage of Americans earning less than $20,000 per year that save for retirement
77: Percentage of Americans earning more than $50,000 per year that save for retirement
18: Percentage of Americans who have spent part of their retirement savings prior to retirement
Reach Damon Cline at (706) 823-3486 or firstname.lastname@example.org.
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