PERSONAL FINANCES: Navigating your first year of retirement | Business

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Like most Americans, you’ve probably spent years working toward your dream retirement. Then comes a time when this career stage shifts from a distant goal to an imminent reality. You can make your first year away from work more rewarding and less stressful when you take the time to anticipate potential challenges and prepare for how you will handle this important life change.

Your state of mind

During your first few weeks as a new retiree, it’s normal to feel both excitement and apprehension. You look forward to having more time to connect with friends and family and to do the activities you love. Getting away from your career can also reduce your stress levels and free you from the burden of having competing priorities. However, saying goodbye to your workplace, your associates, your day-to-day responsibilities, and your regular salary can trigger anxiety and sadness. This is especially true for those who have enjoyed their professional status and fulfilling careers.

If your spouse or loved one is already at home, whether as a housewife or first retiree, recognize that your new lifestyle may evoke similar emotions in that person. Imagine your reaction if he or she retired to your “office”. Change would mean a break from your schedule and routines, even if it means more time together.

For those experiencing mixed feelings, it helps to acknowledge them, both for yourself and for a trusted partner or friend. Remind yourself of why you chose to retire and remember all you have accomplished to get there.

Your goal

With your schedule free of work obligations, it’s important to identify a few ways to fill your time. To start, keep the promises you have made to yourself, your spouse or others about what your retirement will include. For example, if you promised distant relatives to reconnect, arrange a meeting. Set a date to fulfill your dream of visiting France’s wine region or find a teacher who can teach you how to play the piano. Alternatively, you may decide to pursue a still career, a part-time job, or an opportunity to open your own business.

With all of your new possibilities, it’s important to avoid overcommitting yourself. Give yourself a break each day and get involved in volunteer organizations or activities. Now that you have the freedom to do so, make sure you choose to spend your time in the way that is most rewarding for you.

Your finances

Adjusting your mindset from building your nest egg to spending it can be difficult. To make your introduction to retirement life easier, create a plan for how you’ll be compensated in retirement. Start by accounting for your sources of income before determining which ones you will use first. Next, estimate your cash flow for the first year. Planning ahead can help ease worries and reduce the risk of overspending. For reference, have enough cash on hand to cover three years of potential unforeseen expenses. Once retired, regularly monitor your cash reserves to assess your expenses and make any necessary adjustments.

If you are not comfortable or need reassurance about the adequacy of your income and cash flow plans, consult a financial advisor. Together, you can examine the impact of taxes, assess your portfolio diversification, and prepare for the legacy you would like to leave for your community and your family.

Becoming retired means enduring a lot of changes. Although you can’t prepare for all the challenges and opportunities you may face in your first year, planning what you can control allows you to approach this new stage in life with confidence.

Holley Smaldone-Cragg, CFPC, is a Financial Advisor at Ameriprise Financial in Geneva. She specializes in fee-based financial planning and asset management strategies and has been practicing for over 35 years. His website is ameripriseadvisors.com/holley.com.

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