You can deposit a large sum of money in a bank, making arrangements (as some banks will do) for the interest earned on the principal to be mailed to you each month. To receive $300 per month, you would need $72,000 invested at 5 percent interest or $60,000 invested at 6 percent.
If you choose this method, there is always the danger that you will dip into the principal, though you’ve sworn not to. If you select this method, keep reminding yourself that once the principal is gone, there is no way of replacing it.
You may consider investing surplus funds in stocks, bonds, mutual funds, or real estate. Where you decide to place your money depends on your investment objectives. What are yours? Do you want your investment to supplement your retirement income? To provide some income but mostly to conserve capital? To provide both income and capital growth? To realize large capital gains? Your objectives will determine the risk, so before making an investment, be certain that you have the best advice obtainable and that you understand the risks thoroughly. Whatever vehicle you choose, remember that there is no such thing as a "risk less" investment and no such thing as a "perfect" savings investment.
While a large income at retirement won’t assure a happy, rewarding retirement, it will give you a better chance at it than a small income. Financial planning is not a whole answer, but it is the foundation which many retirement plans rise or collapse.
Do not make the mistake of putting off planning in this area. Start now. The longer it’s delayed, the more difficult it will be to get started and the harder it will be to ever reach your goals.
Living expenses may be lower perhaps because you can substract child support and mortgage payments, because of a decrease in income tax payments or an end to your savings plan.
You may also drive a less expensive, older automobile. Why not? You need transportation, but you do not need to impress anyone and you are no longer as dependent on your automobile.
You can save by getting a smaller house or an apartment that will eliminate the upkeep that a home requires. Either way, moving into smaller quarters can save you money.
You will not have to go to work every day so your clothing costs will be lower.
Yet, as many retired people put it,"It is pointed out all to frequently, by those a score of years or more away from retirement, that "When you reach the age of retirement, you can live on less income." I am retiring next year and I ask, Who wants to?! Why should not a man or woman, after a lifetime of sacrifices, of hard work, of effort, of giving, want most to do and to have and least to do without and to have not?"
The argument that a retired couple does not have the same commuting, clothing, luncheon, education, etc., expenses is strong enough in some respects, but what if they want to visit their grandchildren?
Chances are that nowadays if they are living in Connecticut, the grandchildren are living in California, and if they are in California, the grandchildren are probably in Connecticut. What if they want to take gifts to their grandchildren? Or help their children? Or live in a favorable climate and return to their home base occasionally to see old friends? And what about travel? All of these desires - and there are many others - cost money. There are new expenses. There are retirement expenses. They can offset the other expenses that they no longer have.
Retirement, in the minds of many, is synonymous with loafing. This is the first idea that has to be adjusted when you begin to think about retirement. Don’t plan on heading for the rocking chair on the front porch the morning after the retirement banquet.
Loafing is of two varities - mental and physical. Mentally, retirement will mean that suddenly you won’t be faced with the daily problems that you had to cope with in the past. Unchallenged, the mind can gather dust in a hurry and true unhappiness is not far behind.
Physical loafing means that the body’s metabolism, geared to a busy pace, is confronted with a considerably changed pattern. The many little clock mechanism in the body find themselves out of phase. The clocks slow down, but they don’t stop. While sick people need rest to recover, unlimited rest for a healthy person will lead to rapid physical deterioration. Pace down your activities but don’t stop living when you stop working.
Recreational and intellectual security are important in retirement years. Once you have given up your job, you’ll have some 5,000 leisure hours a year to fill. What you decide to do with these leisure hours will spell the difference between a new fulfilling life and a tedious sinking into old age. Note: We said leisure, not vacation.
"Vacation" is that state of having nothing to do, i.e., vacant of occupation or purpose. Don’t confuse this with "leisure", which stems from a word meaning "to be permitted." To have leisure is to be permitted to do something, to be freed from other demands so that you may do something that you otherwise could not do. Begin early to cultivate outside interests that will carry over into retirement. Take up the hobby that you never had time for. Some people return to school. Many institutions offer the chance for continued study - and it doesn’t necessarily have to be study for a degree. Remember: "To learn what is new is to remain ever young."
When planning your retirement, plan to be active. Many psychologists recommend a second career. A second career can solve many of the problems that beset active retireees - not the least of which is loss of prestige.
Few realize how much we depend on our prestige. We are identified by the company we work for, the kind of work we do, and our position in the community. All of us need identification, recognition, and attention. Without it, we feel detached and useless.
It is difficult in your retirement years to imagine that much of the identification on which your prestige is based will begin to evaporate the day after you retire. This is one of the cruelest blows that retired people suffer. A second career can supply the needed recognition and make the retiree feel useful to society again.
If you choose not to take on a second career, you can solve the problem of loss of prestige by being prepared for it. When you know that it is coming, you can be ready to live with the situation.
But what kind of second career? How does one choose? The retired person has several positive factors and several negative factors affecting his or her plans for a second career. One positive factor is experience. Another is retirement income to lean on. The chief negative factor is age - which may exclude you from many positions.
However, many people are looking for experienced, mature people who can give the benefit of their knowledge and know-how. The work possibilities include salaries jobs, the opening of small businesses, part-time jobs, consulting services, and working with youth. Many retirees find a new direction, new friends, new usefulness.
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You can deposit a large sum of money in a bank, making arrangements (as some banks will do) for the interest earned on the principal to be mailed to you each month. To receive $300 per month, you would need $72,000 invested at 5 percent interest or $60,000 invested at 6 percent.
