Do you feel like you’re stuck in a financial retirement fear loop? You’re not alone. For many people, the thought of retirement brings up feelings of uncertainty and insecurity. But it’s important to remember that with a little bit of financial retirement planning, you can overcome your fears and create a bright future for yourself. In this blog post, we will discuss some tips on how to overcome financial retirement fear and create a plan that works for you!
What is Retirement Fear?
The fear of retiring is real. Many people experience it, and it’s more frightening than the fear of dying or being sick. Like other anxieties and fears, most of it is caused by fear of uncertainty. The future is unknown, and when we think about our finances in retirement, it can be scary to imagine not having a regular paycheck coming in. While the process of retiring could be a reward for years of work, it also can cause anxiety, stress, and depression.
If you have these financial retirement fear, you’re not alone. Indeed, those are the concerns that plague many retired people. We don’t know for sure how the next few years will unfold does not mean that you should be in doubt regarding your future retirement. The best method to get rid of the anxiety is to tackle them directly by taking a proactive approach and taking the time to plan.
The good thing is you don’t need to tackle your fears and anxiety on your own. A trusted financial advisor can assist you to solve these issues with confidence and get over some of the most commonly-asked financial concerns about retirement. In this article, we will address these worries and offer suggestions for the most effective strategies to minimize stress before retirement.
Common Retirement Financial Fears and Financial Retirement Planning Tips
Financial Retirement Fear #1: Running out of money
Retirement-seekers are worried about outliving their savings in retirement even more than they do when they die. We’re now living for longer periods than ever before, and the increasing cost of healthcare and inflation makes this fear more plausible. This argument is especially valid because many retired people will outlive the savings they’ve made by eight to ten years, assuming that they can live until the age of 85.
Financial Retirement Planning Tip #1: Have a solid financial plan
Begin with a solid financial plan that is based on your retirement goals. Your financial advisor can assist you in creating an ongoing plan for your finances that evolves depending on your needs. Your financial advisor will ensure you’re heading in the right direction to attain retirement security.
Your expert retirement advisor will assist you in creating a spending plan, determining your desires and needs, creating an income strategy, and preparing in advance for Social Security, market ups and downs, inflation, healthcare costs, long-term health insurance, and taxes.
Financial Retirement Fear #2: Unanticipated health event
As people age, they tend to encounter more health-related issues. This is why it’s common for retired people to be concerned about the possibility that an unexpected health problem could cost them their savings. Furthermore, almost 7 in 10 individuals will likely require some form of long-term-care services during their lifetime, which can be a significant expense. However, financial retirement planning for these occurrences can provide assurance.
Financial Retirement Planning Tip #2: PRSA and HSA
We suggest that people who aren’t yet retired contribute as much as they can to their employer’s retirement plan, for example, the Personal Retirement Savings Account (PRSA). It’s a long-term personal pension plan that functions similar to an investment account, specifically designed to allow you to save for retirement with a variety of options. This will allow you to establish a significant savings base to cover your health care expenses when you retire.
Additionally, think about contributing to the health savings account (HSA). The contribution you make to an HSA now can create a savings bucket that covers health expenses when you retire. It’s also a smart method to cut down on your taxes currently.
If you’re in your 50s, you may want to consider the possibility of long-term care insurance that can cover the costs of nursing homes or home treatment, for instance. It’s important to prepare ahead for any unexpected health issues you could encounter during retirement.
Financial Retirement Fear #3: Inflation
Inflation poses a threat to retirees because it reduces their purchasing power when prices rise in time. To put it in another manner, a euro today will be worth more than €1 tomorrow.
Financial Retirement Planning Tip #3: Invest in the annuity
An Annuity is a type of life insurance policy that guarantees an amount that is fixed over a specific time. Annuities are usually employed as a means of generating income when you retire. When you buy an annuity, you pay a lump sum of cash to an insurance provider. In exchange, the insurance company will be willing to give you a set amount each month for the remainder of your existence.
Annuities are the best choice for those who wish to shield themselves from the fluctuation of the stock market and an income that is secure during their retirement.
The volatility of the stock market and economic cycles will not affect your earnings. Your earnings can be adjusted according to the inflation rate every year. You’ll have the assurance that your funds are safe.
Annuities can mitigate the possibility of not having enough money when you retire and enable your portfolio to remain invested in long-term growth investments with the potential to beat inflation.
Financial Retirement Fear #4: Being forced to retire early
The majority of people are planning to stay in the workforce until their 60s and 70s as they are passionate about their job, the feeling of fulfillment it brings, or they feel they don’t have enough money to retire. But, a growing number of people have decided to quit work involuntarily because of illnesses or caring for a family member or losing their jobs.
Financial Retirement Planning Tip #4: Seek a financial advisor
If you’re retiring earlier than anticipated, it may affect your benefits like any pension payouts or matching contributions you may receive from the company you work for.
Therefore, it’s advisable to develop a strategy to make withdrawals of your savings for retirement as swiftly as you can to avoid outliving your savings. Also, think about the fact that the current pay at the current position might not be the best option. You might be able to work from home, cut the hours you work or negotiate a flexible working arrangement with your employer, or be hired for the same job in another firm.
A financial advisor can assist you in exploring your options and designing plans that you can modify depending on the need to figure out how you can achieve your goals, despite unexpected incidents and situations. A well-thought-out, a well-structured financial plan can reduce the anxiety people have when considering their financial situation and retirement.
Financial Retirement Planning with NFRM
The four financial retirement fears mentioned above have the same theme: anxiety about the unknowable. We at Newcourt Retirement Fund Managers Limited (NRFM) believe that retirement shouldn’t be a nightmare or complicated. You’ve put in the effort to save and earn your money for years now is the chance to relax and enjoy it.
When deciding which retirement pension plan is right for you, it is important to seek professional financial advice from a Qualified Financial Advisor to ensure that you are making the best decision for your individual needs.