Are you ready to plan ahead and to avoid rookie mistakes in retirement? At Money, Alix Langone discusses some of the things retirees need to do before they retire. He writes:
It’s the biggest worry for people approaching retirement, financial advisors say: “Will I have enough? Where’s my cash flow coming from?” But if you actually map out your spending ahead of time, you’ll know the answer (at least for the short term), and you’ll enjoy greater peace of mind when you stop working.
At a minimum, it’s important to figure out your first three to five years of cash flow — the money you will use as everyday income — before you actually leave the workforce. Budgeting for your anticipated annual spending will help you begin retirement with more a disciplined mindset, financial advisors say, and more importantly, it will also help you resist the urge to pull your money out of the market if stocks start to slide — a rookie mistake that financial advisors say tempts many during the kinds of markets conditions we’ve seen of late.
While stocks have rallied since late December, many investors still feel queasy from the market volatility of the past year and worry this historic bull market is on borrowed time. But the dizzying ups and downs of the market won’t affect you for years if you’ve adequately planned ahead.
“If you have money sitting in an account that’s FDIC or government backed, you know it’s going to be there,” says John M. Scherer, a certified financial planner and founder of Trinity Financial Planning in the Madison, Wis. area.
Even if you’re worried about your portfolio long-term, you still have the security of knowing you’ll be ok for the next four, five or six years no matter what happens to the Dow.
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