Retire During an Economic Crisis
When there is an economic crisis, retiring can be difficult. The markets are down, and your retirement accounts have lost a substantial amount of their value. Every day brings a new surprise, with stocks and mutual funds bouncing from highs to lows in a single day. You want to retire. You've worked hard to get to this point, and it's time to enjoy some freedom. This article will give you tips on how to retire during an economic crisis.
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Instructions
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Save as much cash as possible before your retirement date. This cash will help you pay bills temporarily so you don't have to take out money from your retirement funds while the value is down.
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Eliminate all unnecessary bills. With limited cash, you won't have the money for extras that you don't need. Get rid of subscriptions to Showtime and HBO. Cancel the country club membership you've only used once this year. Keep your cell phone and get rid of your house phone. Otherwise, you'll end up pulling money out of retirement funds while the value is down, not giving the funds a chance to recoup the losses that have been incurred during the economic crisis.
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Take out only the mandatory distributions from your retirement plan. If you have reached age 70.5 and have to take a mandatory distribution from your traditional IRA, don't take more than you have to while the value of the plan is down. This gives your retirement plan a chance to rebuild over time as the economy stabilizes.
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Consider getting a part time job when you retire, at least temporarily. This will give you cash so that you don't have to sell stocks that are now worth 20 percent of the value they were a year ago.
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Find a way to stay stress free. Retirement can bring on a whole new set of stress factors. You no longer have to go to work every day, but there are new problems. Your funds are limited, you have too much free time and you sit around thinking about how bad your finances are. Nip this in the bud and get active. Take up a hobby, go to the gym and eat healthy foods.
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Keep your health care plan active. There's nothing worse than retiring and losing your health care plan to find out you now need back surgery. Don't put yourself in a situation where you have to use retirement funds to pay for medical costs.
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Get money out of your home with a reverse mortgage. Once you are over age 62, you can sell some of the equity in your home to the bank for cash or a line of credit. You maintain control of your house, and you don't have to pay the money back while you live in the home. The money is paid back when the house is sold.
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Tips & Warnings
Spend the least amount you can upon retirement while the economy is bad.
Think twice before making a major purchase with your retirement funds while the value is down.
Resources
- Photo Credit Making a financial plan image by Allen Stoner from Fotolia.com
