3 Rules for a Comfortable Retirement: Living to the Fullest

First Service Credit Union
8/1/2018 12:00:00 AM - 3 min. read

Retiring is a major life change, but when done carefully, the transition can be smooth. You’ve worked hard to make it to your golden years, so ensure you can stay there comfortably by following these three money-management rules for retirement.


Rule #1: Create a retirement income strategy to make your dollars last

According to the Social Security Administration, the average retiree can expect to live at least 15 years beyond their retirement date. With longer life spans, make sure your nest egg will last by using a strategic retirement withdrawal plan.

“I advise retirees to visit the Social Security Administration’s online retirement estimator tool to review their payout options, before they begin drawing their social security,” says Michael Alexander, financial advisor for CUSO Financial Services, L.P.30 “If you can wait until your full age of retirement, you’ll receive a higher pay out.”

Alexander is an investment advisor who assists First Service Credit Union members with their investment and retirement needs. “Next, I tell my clients that they will need three primary [financial] buckets when they retire,” he says:

  • Emergency savings bucket: “This should contain one year’s worth of bills,” Alexander says. You’ll use these funds for quick access to cash for life’s emergencies, such as home repairs and medical expenses. While it’s usually advised to have three-to-six months in reserve for emergencies, Alexander recommends setting aside 12 months, upon retirement, because you’re no longer generating steady income. These funds can be kept in a bank or credit union savings, money market, or CD account, for easy access.

  • Your supplemental income bucket is used to cover expenses that your social security and/or pension check cannot. “Your supplemental income may come from an annuity, a 401(k) rollover, or mutual funds,” Alexander says. “It’s important to consult with a financial advisor regarding the best options to meet your needs.”

  • A discretionary bucket is a savings account for your retirement pleasures, such as vacations and trips to see your grandchildren. Estimate how much you plan to spend discretionally each year and set that amount aside in a high-interest savings account.


Rule #2: Generate passive income in retirement

Passive income is money generated from investments or business interests. You don’t earn these funds by working a daily job, although they may require some effort on your part. If you’ve determined that you may outlive your funds or need extra money, consider these means for generating passive income:

  • Investments such as stocks, bonds, annuities, and mutual funds can generate immediate income. Each have their risks and benefits, and a financial advisor should be consulted for guidance. Of course, some investments are not guaranteed.

  • Rental real estate is another means of generating continuous income; however, the property and renter must be carefully selected to ensure a steady flow of revenue. If you own a vacation home, you can rent it out for extra income.

  • Starting a business can also generate a stream of income and provide you with an activity to keep your mind active. Assess what skills and talents you have, which you can easily turn into a profit-earning business. In addition, you should examine carefully the business’ risks and margin of profitability.


Rule #3: Stay healthy

Taking care of your health plays a vital role in enjoying your retirement. High medical costs can eat into your nest egg, and the burden of an illness can keep you from living your best life. Eat a balanced and healthy diet, and stay active with a routine workout regimen.

Early disease detection is also key to staying well; so, continue your annual check-ups and routine wellness exams.

[30] Non-Deposit Investment Products: First Service Wealth Management Financial Professionals are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty States of the United States of America. FR2877186.1-12119-0122.