Here’s How My Finances Have Changed
When it comes to personal finance, retiring is a big life shift. Moving away from working full time, focusing on family, travel or interests, and making your money work is all a balancing act.
There are programs, such as Social Security, that can help offset the income lost from working full-time, however, it usually only is part of most retirees’ budgets along with a mixture of 401(k)s, savings, pensions, and more.
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GOBankingRates spoke with a retiree in the Washington D.C. area — who wished to remain anonymous — about how their finances have changed in the last two years since they have been receiving Social Security benefits.
“Like your paycheck when you’re working, the money goes to all your regular expenses: food, mortgage, electricity, etc.,” said the D.C. retiree. “You try to stay within your means, and dip into savings when you can’t. For example, I took money out of savings to pay for a recent bathroom remodel.”
This retiree and his wife decided to continue living in the D.C. area for retirement to be near their daughter, her husband, and their grandson. The couple’s eldest son lives in Brooklyn, New York, which is more expensive than D.C.
Were it not for their kids and grandkids being on the East Coast, the D.C. retiree and his wife would look for some place cheaper to live.
“We have yet to dip into our 401(k)s. We still have other savings we’re using, and we’re not yet old enough to take mandatory payouts,” explained the D.C. retiree, who is not yet 70 years of age, nor is his wife.
Read Next: Social Security Benefits Might Be Harder To Qualify for in the Future — Here’s What You Need To Know
The couple said they “were fortunate to have hooked up with a financial professional in the late 90’s when I was working in San Diego, and we started to have more disposable income. I decided I didn’t have the time, the knowledge or the inclination to manage my own money.”
“I’m glad we got into our 401(k) [plans] early and were religious about contributing,” continued the D.C. retiree. “In the ’80’s, when I worked at Hearst in Pittsburgh, they introduced the 401(k)s and stopped funding our pensions. I went to some of the introductory seminars, and realized it was a no-brainer. What other investment guarantees a 50% return?”
The D.C. retiree made sure to work as long as possible and max out all of his 401(k) contributions because an individual is allowed to contribute more once they are past the age of 50-so called “catch-up contribution.”
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