Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
Home » Retirement » Retirement Planning

Retirement Planning

What Is a Retirement Bucket Strategy and How to Use It?

Reading Time: 5 minutes Retirement planning marks a crucial time in life, and a retirement bucket strategy is one way to manage your finances before entering retirement. As you come close to retirement age, it becomes essential to have a well-structured investment approach that ensures a comfortable retirement.  A retirement bucket strategy is an approach that involves dividing your retirement savings into different “buckets” based on different time horizons and investment goals. The approach minimizes market volatility and provides flexibility in managing your retirement income.  This guide will explore what a retirement bucket strategy is and how to use it effectively to plan for your retirement years. What Is a Retirement Bucket Strategy?  A retirement bucket strategy is an investment approach that involves dividing your retirement savings into three buckets based on different time horizons and investment objectives. These buckets are typically labeled as short-term, mid-term, and long-term. In addition, each bucket is invested in different asset classes and investment vehicles. A retirement bucket strategy aims to minimize the impact of market volatility on your retirement savings while providing enough flexibility to meet your short-term and long-term retirement needs. This approach helps you maintain a diversified investment portfolio, one that is able to adapt to changing market conditions and provide options for managing your retirement income. How Does a Retirement Bucket Strategy Work?  A retirement bucket strategy typically involves three buckets: short-term, mid-term, and long-term. Each bucket has a specific purpose, time horizon, and investment approach. Let’s see how all three buckets work. Short-Term Bucket  The short-term bucket is designed to cover immediate retirement expenses for the first few years after retirement. This bucket should include enough cash or low-risk investments, such as money market funds or short-term bonds, to cover your living expenses, healthcare costs, and other short-term financial needs. The short-term bucket is meant to provide a stable source of income and serve as a buffer against market volatility. It should be easily accessible and not subject to significant fluctuations in value. The short-term bucket should typically cover your living expenses for the first two to three years of retirement, providing you with peace of mind and financial stability during the initial phase of your retirement journey. Mid-Term Bucket  The mid-term bucket covers your expenses for the next 5 to 10 years of retirement. This bucket should be invested in a balanced portfolio of moderate-risk investments, such as diversified mutual funds or exchange-traded funds (ETFs), that offer growth potential and income generation. The mid-term bucket is meant to provide moderate growth potential while maintaining a certain level of stability. It should be diversified across different asset classes and sectors to spread the risk and minimize the impact of market volatility. This bucket should be reviewed and rebalanced periodically to align with your retirement goals and risk tolerance. Long-Term Bucket  The long-term bucket is designed to cover your expenses for later retirement years, typically beyond ten years. This bucket is invested in higher-risk assets, such as stocks or real estate, that have the potential for higher returns over the long term. The long-term bucket is meant to provide growth potential to keep up with inflation and provide a source of income well into retirement. However, it is also subject to higher market volatility and may experience fluctuations in value. Therefore, it is important to diversify your long-term bucket across different sectors, regions, and investment styles to spread the risk and maximize the growth potential. Pros and Cons of a Retirement Bucket Strategy  Like any investment approach, a retirement bucket strategy has advantages and disadvantages. So, let’s see some of the pros and cons of using a retirement bucket strategy for your retirement planning. Pros of a Retirement Bucket Strategy A retirement bucket strategy allows you to diversify your investments across different time horizons, asset classes, and risk levels. Diversification helps spread the risk and minimize market volatility on your overall retirement savings. The retirement bucket strategy provides flexibility in managing your retirement income. You have separate buckets for short-term, mid-term, and long-term needs, which allows you to adjust your investments and withdrawals based on your changing financial needs and market conditions. This flexibility helps you make informed decisions and adapt to unexpected situations during your retirement years. You can effectively manage your risk exposure by dividing your retirement savings into different buckets with varying risk levels. The short-term bucket provides stability, while the mid-term and long-term buckets offer growth potential. This risk management approach helps you balance your portfolio and reduce the impact of market downturns on your retirement savings. Having a retirement bucket strategy in place gives you peace of mind during your retirement years. In addition, knowing that you have a well-structured plan with different buckets for different time horizons and financial needs can provide you with a sense of security and confidence in your retirement planning. Cons of a Retirement Bucket Strategy Implementing and managing a retirement bucket strategy requires careful planning, monitoring, and periodic rebalancing. In addition, it may involve multiple investment accounts and transactions, which can be complex and time-consuming. You may also need to seek professional financial advice to ensure that you are making informed decisions. Despite diversification, there is still a risk of market volatility affecting the performance of your investments. The value of mid and long-term investments can fluctuate based on market conditions, which may impact your retirement savings. Therefore, it is important to be prepared for potential market risks and have contingency plans in place. The retirement bucket strategy may not fully protect against inflation risk. Inflation erodes the purchasing power of your retirement savings over time, and if the returns on your investments do not keep pace with inflation, it may impact your ability to meet your retirement expenses in the long run. Conclusion  A retirement bucket strategy can be useful for managing your retirement savings, minimizing market volatility, and providing flexibility in meeting your retirement needs. By dividing your investments into short-term, mid-term, and long-term buckets, you can balance risk and

One More Year Syndrome – What Is It and How to Overcome It?

Reading Time: 6 minutes The “One More Year” syndrome is a psychological condition that forces individuals who want to retire to keep going for one more year. The syndrome is most prevalent in individuals who follow the FIRE movement. FIRE, for those who don’t know, stands for Financial Independence, Retire Early. It is a movement whose goal is to help us achieve financial independence with the ultimate goal of retiring early. FIRE is self-explanatory, but the “One More Year” syndrome has recently gained plenty of exposure, as experts tie it directly to FIRE. One More Year syndrome isn’t necessarily a negative syndrome, but it does state our disinterest in retiring, despite achieving financial independence and having enough money to support ourselves through retirement. This guide aims to explain the One More Year syndrome and provide our readers with a thorough explanation of what the syndrome is and how to overcome it.  What Is One More Year Syndrome?  One More Year Syndrome refers to a psychological urge that forces individuals who have reached a point of financial independence or have enough savings to retire comfortably to continue working for an additional year before retiring. This syndrome has many characteristics, but the most notable is the persistent feeling that “just one more year of work” will provide an extra cushion of financial security.  Individuals who continue working for one more year despite reaching a point where their current finances are sufficient to support them through retirement believe that one more year will allow them to make enough money for a more extravagant retirement lifestyle. But many also look at the syndrome in a negative light.  They believe the One More Year syndrome to be nothing but a means of earning more money despite achieving financial independence. Therefore, it can be a challenging mindset to overcome, as the allure of earning more money and further padding one’s nest egg can be enticing. Why do People Keep Working for One More Year? Several reasons exist as to why people may experience One More Year Syndrome. Some of the most common ones include: Fear of Running Out of Money Despite having a substantial nest egg, some individuals may still have lingering concerns about their financial security in retirement. They worry about unforeseen expenses or outliving their savings, leading them to feel the need to work for one more year to build an additional financial buffer. Such feelings aren’t uncommon, especially for those following the FIRE movement. But working for one more year reinforces doubts many FIRE followers have regarding claims they’ve achieved financial independence. Therefore, the One More Year syndrome states you’re not financially ready to retire.  Attachment to Work Identity Many people find purpose in their careers. Moreover, many people see their work as their identity. Therefore, retiring means letting go of a significant part of their identity, which can be daunting. However, continuing to work for one more year allows them to hold on to that familiar sense of self and purpose. The One More Year syndrome helps these individuals with attachment to work identity issues. For them, the syndrome isn’t a sign they’re not financially ready to retire, but they’re not psychologically ready to quit their jobs and careers.  Social Pressure A surprising number of individuals who experience the One More Year syndrome feel the social pressure of working past the point of achieving financial freedom. Nowadays, social norms and expectations play a big part in how others view us.  For example, retiring at 47 might be viewed as negative or lazy by some. As a result, most want to gain social approval from their peers to avoid judgment. This prompts them to continue for one more year to gain much-needed social approval and be viewed as hard-working and productive members of society.  Lifestyle Inflation A core pillar of financial independence is living below your means. However, many experience lifestyle changes as their incomes and investments increase over time. The sudden change in lifestyle inflation forces individuals to rethink their retirement strategy. Upon further review, individuals conclude that their current income level isn’t sufficient to support life through retirement, especially with increased spending and expenses.  On the other hand, many factors related to lifestyle inflation are economic in nature. These are unforeseen and hidden factors, and many FIRE movement followers fail to predict them when developing their retirement strategy.  As a result, they encounter the One More Year syndrome and look to continue working to maintain the same level of spending and lifestyle in retirement. Benefits of One More Year Syndrome With that said, not all is doom and gloom with the One More Year syndrome. Despite outlining the clear and obvious holes in individuals’ retirement strategies, the syndrome has its benefits. Those include: Continuing to work for one more year does provide individuals with the opportunity to accumulate additional savings. With these savings, individuals increase their financial cushion and are more financially ready for retirement. The obvious psychological benefit of the One More Year syndrome is the sense of security regarding running out of money.  Most see retirement as a time to rest and relax, travel, and even pursue other interests and hobbies. Working for one more year provides an opportunity to gain extra income to fund these activities and potential new hobbies. As a result, many choose to work for one more year to make life in retirement more luxurious and enjoyable.  Retiring at 47 provides fewer social security benefits than retiring at 67. While most who achieve financial independence stop working well before 67, working for one more year puts you closer to retirement age. As a result, individuals reap more social security benefits through a higher monthly social security income in retirement.  How to Overcome One More Year Syndrome? Working for one more year does have its benefits and drawbacks. For many, working for one more year despite achieving financial independence is appealing, especially if they’re far from the traditional retirement age. But we must also acknowledge one potential downside to

Pretirement Planning: Making the Most of Your Career and Retirement

Reading Time: 5 minutes Workforce changes and demographic shifts pave the way for a new working state dubbed pretirement. The concept of working until you’re 65 and then suddenly retiring has been the norm for generations. However, recently, we’re seeing that early retirees aren’t as interested in giving up on making a living and instead continue to take part-time jobs well into their retirement.  This new concept isn’t popular with every retiree, but many aren’t as comfortable giving up working again altogether. If you’re one of these people, you’re probably unaware of pretirement and what it is. If so, this guide will walk you through the concept of pretirement, what it is, and how to go about pretirement planning to make the most of your career and enjoy retirement at the same time. What is Pretirement?  Pretirement is a new working state that bridges the gap between full-time employment and retirement. In its essence, it is a flexible arrangement where you can work part-time, take on consulting or freelance projects, or start your own business while still enjoying retirement.  The state of pretirement allows individuals to continue working and earning an income while gradually reducing their workload and transitioning into full-time retirement. As a result, Pretirement offers more leisure time and less stress while maintaining a sense of purpose and fulfillment. Pretirement aims to ease people into retirement instead of abruptly halting their existing employment arrangement and going into retirement. Pretirement is positioned between traditional employment and retirement and is gaining popularity in first-world economies with aging populations. But considering the unfamiliar aspect of this concept, many early retirees struggle to go about pretirement planning.  Why is Pretirement Gaining Popularity?  As with any new or emerging concepts, it will take time before pretirement becomes the norm. While at is, we cannot say for certain that pretirement will become the new norm. With that said, pretirement is trending due to a variety of factors. Here are some reasons why people are deciding to try pretirement:  These factors aren’t the sole reason pretirement is gaining popularity in first-world economy countries with aging demographics. But it helps paint a picture of the need for individuals to continue working in some capacity. So if you’re considering trying pretirement, careful planning is crucial to making it work for you. Therefore, let’s see how to plan for pretirement.  5 Steps to Plan for Pretirement Whether you’re forced to remain in the labor force in your retirement years or want to try pretirement to escape boredom, the reality of the modern world forces many to seek working opportunities past 65. That means many are preemptively planning for working in retirement, regardless of the situation they find themselves in. Here are the steps to prepare for pretirement: Step 1: Determine Your Financial Situation The first step in pretirement planning is assessing your finances. That means assessing your income sources and savings to determine whether you can reduce your workload or take part-time jobs and gigs.  In this first crucial step, individuals must come to terms with the outcome. For those with little to no savings in their accounts, pretirement might be the only solution for a stable life in retirement.  Step 2: Assess Your Skills The reality is that old age limits your part-time employment options. Many individuals who’ve worked labor-intense jobs and lack the skills to transition to other areas will have difficulty identifying employment options like before while in retirement.  Therefore, the next step in pretirement planning is to determine what you’re good at and how to apply said skills by working part-time or freelance gigs.  Step 3: Lower Your Living Standard Whether pretirement appeals to you or not, it’s well-known that retirees don’t make the same money as they used to. So unless you have a stable investment portfolio and passive income to support your existing lifestyle in retirement, you’ll need to lower your standard of living. Determining how much, however, is nearly impossible, as unexpected costs are equally impossible to predict.  Step 4: Identify Passive Income Ideas The best way to support your lifestyle in retirement is to supplement monthly paychecks with passive income. However, again, you’ll need time to build up your passive income portfolio. Fortunately, there are options out there. For example, one of the best passive income ideas is to turn to rental properties, such as rental condos or self-storage units.  Another option is to build up a stock investment portfolio. But unlike rental properties, investing in stocks and other commodities takes years to bear fruit.  Step 5: Plan Ahead of Time It’s impossible to plan for pretirement at 65; you need years to prepare for it. This final step may be obsolete for many individuals who lack the financial capacity to support their families on a pension. But if you’ve got time, planning is key to making sure you’ve got enough money to retire while remaining in the workforce in some capacity.  Benefits of Pretirement Pretirement is more than just a solution to maintain your current income level. Quite the opposite, pretirement offers numerous benefits for individuals not ready to quit working. Here are some of the main pretirement benefits: Improved Work-Life Balance Pretirement provides more leisure time, which can lead to a better work-life balance. This allows for more time to pursue personal interests and hobbies while still working in some capacity.  Reduced Stress Pretirement can be less stressful than retirement, as you have more control over your workload and schedule while enjoying your retirement years. This can lead to better mental health and well-being. Sense of Purpose Many people find purpose and fulfillment in their careers, and pretirement allows them to continue working in some capacity. In addition, many people lose their sense of purpose while in retirement. Retirement can lead to boredom and loss of meaning in life. So one way to negate the adverse effects of retirement is to ease your way into retirement.  Continued Social Connections Pretirement allows you to stay connected with your professional network and colleagues.

9 Emotional Signs You Need to Retire

Reading Time: 4 minutes It is hard to decide when to retire, and having a set of emotional signs you need to retire can make the decision easier. For some, the choice depends on whether they feel ready to start living a more leisurely life of travel or spend time with family. For others, the reason could be finding a new hobby or even an inability to deal with stressful tasks. More often than not, it is a choice muddled by emotions, which is problematic. The problem is that many people honestly do not know when they are ready to retire. Consequently, here are the nine emotional signs you need to retire. Envy and Stress Envy is perhaps the earliest sign of impending retirement. When you start feeling envious of coworkers nearing that period, it might be the best time to start preparing for retirement. It is a clear sign, yet many people tend to miss it. You should not feel concerned about your newfound envy – you should take it as a sign that you are ready for a different pace of life. After all, this is just an emotional sign you need to retire. Even without this article, you should know that constant stress means you are ready to retire. Although many people feel stress throughout their working lives, there comes a time when they feel as if they can no longer cope with it. When that time comes, it is best to retire early. Apathy and Musing Another common sign that you should retire now is apathy. For many, indifference is not uncommon. However, when indifference turns to apathy, it is usually an emotional sign you need to retire. Be careful not to confuse this feeling with job dissatisfaction. While the former might mean you need to retire, the latter means it could be time to switch jobs. Musing is harder to notice. Many people spend time musing on various ideas. Although, when you find yourself constantly musing about how your job stops you from spending time with family and becomes too great of a burden, it could mean it is time to retire. Dissatisfaction and Complacency Dissatisfaction can come in many forms. After all, it has become an inadvertently integral part of many workplaces. Part of the problem is that many people disregard the emotional signs you need to retire. It is hard to take dissatisfaction as a definite sign that you should retire, but if the time is right, it might as well be. People are always looking forward to retirement, but if the job is unfulfilling to the extent that it is all you can think about – retire now. Have you ever felt as if you have done all you could in your field of work? This feeling often comes with a sense of accomplishment, but sooner or later, it brings complacency. Complacency does not have to be a negative feeling. After all, there comes a time when you truly have used up all your networking opportunities. Additionally, you may have done everything you could or wanted to do in a specific field, which is why complacency is often an emotional sign that you need to retire. Anger and Frustration Nowadays, fast-paced work environments have made sure that anger and frustration are unavoidable. As people grow old, they lose the ability to filter these emotions. Suddenly, these two crucial emotions that had once been their drive to succeed have now become a hindrance.Similar to aging, retirement is an unavoidable phenomenon. The more time you spend working, the closer you are to it. As a result, these emotional signs that you are ready to retire are often a hard pill to swallow, especially for those who have spent their entire lives dedicated to a profession. However, as many adjust to their retirements, they soon realize that it may not have been such a negative aspect of life. Depression Depression, the last and most important of the emotional signs that you need to retire, is often the most downplayed of them all.It is the one emotion that all of the previously mentioned ones lead to if left unchecked. Accordingly, it should be one of the most obvious signs that it is time to retire. Many deal with depression after retirement, which is why it is best to address it as soon as possible. Neglecting to do so can lead to various issues down the line, which is why work-induced depression should not be taken lightly and often calls for early retirement. Planning for Retirement Although any of these emotions could justify retiring early, the question is whether you can retire early. This, in turn, depends on a select few variables. Afterword In summary, there are numerous emotional signs that you need to retire. Not all of them should be taken seriously, and not all of them should be taken lightly. In the end, it is up to the person to decide whether or not it is the right time to retire.Nevertheless, people are often unaware of their emotions and could feel as though they have an obligation not to retire. In the end, if you have the means to and no longer feel the need to work, it might just be a good time to retire.

Retirement Tips: Retire Rich and Happy

Reading Time: 4 minutes If you’re looking to retire, then planning is key. Unfortunately, you need to build up your finances to enjoy a happy retirement life when you do so. But there is a silver lining in all of this. Thanks to our retirement tips, you too can sit back and enjoy the rest of your days in relative financial safety. To do that, you do need to plan ahead. Considering that everyone should be doing it, we’re here to give you our retirement tips that allow you to plan strategically. Determine How Much Time You Have Until Retirement When building an effective retirement plan, the first phase is all about determining how much time you have left. A retirement plan for a young adult will be much different from an adult with three years left. But what every age group has in common is an investment portfolio. Every person needs an investment portfolio if they want to retire rich and happy. The more time you have until retirement, the more time you have to grow that portfolio. Let’s assume this to be the case. If you have three decades to prepare for retirement, then you can be flexible. The issue is more prominent when planning late. There isn’t much room to wiggle if you only have three years left. With no plan in place and no finances to work with, your time is very much limited. So are your investment options. But one thing that goes in your favor is safety from inflation. Naturally, you can focus your investment portfolio on accumulating passive income. When that’s the case, it’s much wiser to invest in bonds and similar less risky securities than copper stocks, for example. With three decades to prepare for retirement, you can shift your investment portfolio to include more volatile options such as stocks. Investing in stocks does give you better returns than bonds, but only in the long term. So if you have more time to plan, consider the long game instead of the short one. Determine How Much Money You Need To retire rich, means accumulating enough wealth to live a happy retirement life. But a retirement tip that many people overlook is that most people fail to determine how much money they need to do so. Things can change a lot in thirty years. The price of milk might rise as much as double, or inflation could decimate your retirement investment and ruin your plans. Unfortunately, it’s very difficult to keep tabs on these topics unless you’re an active observer. Everyone wants to go through easy retirement, but no one bothers to calculate just how much money they need to retire happy. So the next retirement tip is to do just that. But how? Well, we can do that by looking at statistics of current annual spending by retirees. Retirees in 2020 spent $47,259 on average. This number presents nearly $20,000 less than what workers had spent in the same year. So from the get-go, we know that retirees require less money to live. But considering that the cost of living increases every year, you will need to accumulate a greater income until retirement. Discuss Retirement Spending Now that you know how much money retirees need to live a happy retirement, the next thing to do is to discuss spending. With inflation being a thing, just assume that everything will get more expensive when the time to retire comes. So when you and your spouse prepare for retirement, prepare that prices will go up as well. This retirement tip will serve those of you who plan to retire in the next few years. It’s no use discussing retirement spending with your spouse if you have 30 years left in the workforce. Since easy retirement is all about planning, you need to be on the same page with your spouse. That means discussing making huge payments such as a new car or a buying holiday home. Consider the Gig Economy According to Statista, the gig economy is fully operational and worth $347 billion. A good retirement tip and a good personal finance tip is to find new sources of income. Your retirement savings might be well on track to support easy retirement, but that doesn’t mean you shouldn’t look for unique opportunities to maximize income. To do that, consider working past retirement. According to JP Morgan Chase’s research department, 1% of all seniors are earning money through online means. There are plenty of work opportunities for seniors in the gig economy. By working on a short-term basis, seniors can find new sources of income through the gig economy. There are plenty of businesses that require short-term workers, and seniors might find all kinds of employment opportunities. Seniors can find work for a company, or complete services and get paid for it. Seniors can work past retirement by working as rideshare drivers, delivery drivers, technical writers, or even rent real estate through Booking and Airbnb. While these are only a handful of examples, working past retirement is a good retirement tip that everyone should consider. Work On A Budget A budge is a handy tool that can help you plan for an easy retirement. Much like discussing retirement spending, this is one of those retirement tips that benefit those who plan to retire in a few years. A budget will help you for easy retirement as it outlines how much money you have and how much you can spend. Based on the result of the calculations, you can allocate more money towards your retirement plan. This could mean investing more in bonds or a retirement account. Since the goal of many workers is to retire rich, a budget doesn’t give you that much room to maneuver. But what a budget does do is help you plan for an easy retirement. Finishing Thoughts Our five retirement tips are here to help you with your retirement plan. Before you even do that, it’s important to have a retirement plan in