Utilizing your Plan B can turn into something beautiful.
Throughout your life, your journey may consist of several years of working, saving, and planning for your goal lifestyle. You might encounter a detour on this journey. It is okay to be faced with the unexpected, you are not alone.
The transition into retirement can be stressful sometimes but it is crucial to take a minute to look at all you have before making quick unplanned decisions.
Think about these five steps:
Breathe. You don’t want to make an impulsive decision because it might affect your future financial security. Try to rethink about your situation as a fresh start, the start of a new chapter.
Get health insurance. If you’re not old enough for Medicare there are other options such as COBRA, a spouses health plan, or a high deductible plan.
Evaluate your savings and income sources. Before you use your 401K consider other alternatives such as reducing your expenses and tapping into other savings you might own. Taking out money from your 401K early can result in significant penalties.
Think twice about Social Security. Attempt not to collect your Social Security unless it is absolutely necessary. Taking your social security early will significantly lower your monthly benefits for your future. If health issues come into play in your situation Social Security disability benefits may be the solution.
Capitalize on other government benefits. You may qualify for assistance from the state or local level, such as unemployment.
Embrace the new normal
If you have stuck to a retirement plan this long you are able to handle the effort that needs to be put in to make adjustments. Revising your spending strategy can help by looking at essentials and creating a new budget. Coordinating with your financial and tax advisors can assist in better structuring your cashflow and taxes. Think about putting it into writing by creating a spending policy statement with you advisor. Sometimes you have to rethink your asset allocation depending on your current situation. As an example, if you are retired or approaching retirement you might think about taking less risk in your portfolio.
Now that you have laid the groundwork for your new chapter of retirement, consider what is next. Is it finding a part time position? Is moving an option to a less expensive location? Once you have “come to terms” with this new journey you should revisit your financial plan to make sure it is reflecting your present needs and wants.
Asset allocation does not guarantee a profit nor protect against loss.
Sources: genworth.com; marketwatch.com; fool.com; money.usnews.com; kiplinger.com