Keeping up a proper savings plan for retirement can feel like a monumental accomplishment. As is the case with most things that are long-term, however, careful planning is required, which means securing your cash flow for savings before you retire, protecting it from unexpected events, and maintaining your cash flow once you reach retirement. We’ll be looking closer at this process in the next two posts.
Before Retirement
Budget & Save—There aren’t many sexy ways to go about this one. All the same, your budget is your lifeline to your future’s funds—only by following it can you reach that future self you plan to become. With as many different ways to budget as there are types of people, I won’t dwell on the specifics in this post. Just know that the more you leave your budget to chance, the more susceptible you are to unexpected emergencies.
Emergency Funds— Do you put your extra money into an emergency fund or put it away for retirement? Well the best answer to this trick question is…both. A dedicated emergency fund can keep you from doing something rash with your retirement savings, or strapping yourself with added debt, like a second mortgage, which can take years to eliminate. To protect, work into your budget the most you can spare for your emergency fund and set up an automatic transfer to the fund at the first of the month. For some, a Roth IRA can more easily double as an emergency fund, but it’s best to speak with a professional before working this into your retirement plan.
Keep your Money Safe—It can be pretty scary to think of all the unexpected hiccups that can cut into your cash flow. From car accidents to termites to health concerns or worse, taking precautions against the economic bite of life’s hiccups is key to maintaining cash flow into retirement. It’s up to each person’s personal situation to decide whether it makes sense to take on an insurance policy. My added recommendation is to regularly (every 3-5 years or so) review your insurance policies and look for ways to improve them, whether that be eliminating redundant policies, shopping around for better rates, or adding policies that may benefit you.
I glossed over the fact that the robustness of your retirement plan plays an enormous part in securing your income source—this is the point of retirement planning, is it not? If you have some grey areas in your plan for your cash flow after retirement, give us a call at Miramontes Capital. We’ve helped people all over the Irvine area achieve their goals in retirement planning.