The word ‘luxury’ means different things to different people. It’s subjective. For some, 3 full meals and a roof overhead might constitute a luxury. For others, it might mean trips to exotic locations, nice cars, and fine dining. Regardless, as you prepare for retirement, there are steps you can take to ensure that you live out the end of your days in comfort.
Want to know the best part about retirement? Your time and your money are yours to do with as you will! As a result, you need to set retirement goals that are reasonably within your reach.
Sit down with your spouse and define what luxury looks like to both of you. Take the time to discuss with each other what you desire out of retirement. Examples include:
- Dining out nightly
- Shopping weekly
- Golfing multiple times a week
- Going on regular vacations
- Buying fun toys: boats, cars, motorcycles, etc.
- Not worrying about bills
If you’re still in the process of saving for retirement, meet with your certified financial planner and share your retirement goals. Your CFP will be able to help you create a game plan so that you can reach financial stability and live out your retirement dreams.
It’s necessary that you take a thorough account of your finances and then play with your budget to see what is and isn’t financially feasible. The bucket method is a fantastic strategy for organizing your retirement funds so that you can pursue your dreams while living within your means.
Specifically, there are 3 buckets you’ll have to budget for:
- Bucket #1: Everyday expenses – This is immediate or accessible cash. It’s money that you’ll need on hand to pay daily expenses such as bills, utilities, home security, groceries, and home repairs.
- Bucket #2: Savings and investment goals – This is short-to-mid-term savings used for activities such as luxury vacations, new toys, or more luxury spending.
- Bucket #3: Emergency fund – This bucket is composed of funds or investments that you will not want to touch for at least a decade, unless there is a critical emergency or a surprise expense.
Take Equity from Your Home
Don’t have heirs that you plan on passing your home to? You can increase your retirement revenue stream by taking out a reverse mortgage. “What is a reverse mortgage?” you ask. For homeowners who are 62 years or older, it’s simply a financial agreement wherein you give up a portion of your home equity in exchange for a monthly or a lump sum payment.
Do you have some big-ticket items in mind? This supplemental retirement income could open up luxurious avenues that would otherwise be impossible to explore.
Delay Social Security
Once you begin to draw on it, Social Security is a monthly income that you’ll receive until you die. But did you know that every year you hold off using your Social Security adds an 8% increase to the funds available? You can defer until the age of 70.
If you can afford to create a luxury budget that does not include Social Security, it might be worthwhile to wait a few years. A little patience could yield a much larger income stream down the road.
Move Somewhere Affordable
Do you live somewhere that has high taxes or expensive property? You could likely live a much more luxurious lifestyle in a state with lower taxes, expenses, and home prices. Consider starting a new adventure by selling your home and moving to someplace new.
Another option worth considering would be to move abroad to a place where the dollar goes even further. There are locations in South America and Asia where you can live like royalty for just a fraction of what it would cost in the U.S.
Retire in Luxury
Ending your life in luxury is an achievable dream so long as you take the time to discuss your goals, and then save and budget accordingly. Once you reach retirement, it’s essential that you stay on budget if you want your funds to last. By setting goals early on and sticking to your financial game plan, you take the steps necessary to ensure that you live out the rest of your life in luxury.