Steps On How Not To Run Out Of Money Before You Run Out Of Time

Do you find out that your monthly pay and/or pension payouts are not enough to reasonably sustain you? What about your monthly Social Security check? Do you notice that even with all the scrimping and saving you did as a young whipper snapper, you now spend beyond your means?

If so, you are not alone.

According to a survey conducted by Indexed Annuity Leadership Council, 25 percent of Americans are worried they will outlive their income.

Perhaps, like many other people, you didn’t prepare for your golden years as well as you probably should have. Maybe you invested well, but then—right out of left field—you lost big in September, 2008, when the stock market crashed. Perhaps your nest egg was completely depleted or it took you up until now to recover . . . or maybe you haven’t recovered from the loss.

The economy is constantly changing and the stock market is a total crapshoot; it’s not easy to keep up with the signs of the times. (It’s even more trying to keep up with the Joneses.)

There are ways to recover, however. But before we get into the details of money management in retirement, take a moment to answer these questions: When it comes to your money mindset, what pops into your head? Are there any limiting beliefs up there?

If you have self-limiting beliefs around money, bring them into your current awareness. They’ve most likely been lodged inside your brain since you were a child. What you may not realize is your belief system is programmed by the outdated thoughts of your former self; and they are no longer valid.

It isn’t where you came from; it’s where you’regoing that counts.

Ella Fitzgerald

Perhaps in the past you felt guilt, remorse, anger, or fear about money. Maybe you still do and that’s why you’re reading this; but none of those negative emotions need be true of your current situation. In order to transform your financial health, you are going to have to retrain your stubborn, old brain.

How does your ideal lifestyle look like?

• Get into a relaxed, meditative state and take a few moments right now to do a “Future Self” visualization.
• Close your eyes and imagine being in the presence of your Future Self (yourself several years from now), living an ideal life.
• Notice where you are and what the surroundings look like. Use all your senses to get a good feel of the place.
• Greet your Future Self and notice the way your Future Self returns your greeting, welcoming you into this time and place. Become fully aware of this person. What does (s)he look like? Notice how (s)he is standing or sitting, what (s)he is wearing.
• Notice how you feel while in your Future Self’s presence.
• Move into a conversation with Future Self. Perhaps your Future Self offers you something to drink or eat. Really settle in and make yourself comfortable.
• Begin your conversation by asking questions of your Future Self. What do I need to pay attention to most right now in my life?
• Take a moment now to hear the answer.
• Now ask your Future Self: Knowing what you now know, is there one piece of advice you can give me?
• Listen to what your Future Self has to say.
• Now take a moment and ask your Future Self your own question. Wait for the response.
• When you are ready, bring your visit to a close. Thank your Future Self for sharing the insight and wisdom with you.
• Say goodbye and leave the scene.
• Open your eyes and write down the answers your Future Self gave you.

Now that you know what your Future Self is up to, it’s time to return to the present moment and get back to work. Are you ready to figure out what you have and what you need in order to make your dreams a reality?

Its time to take care of your money.

When it comes to retirement there’s a lot to it, and the adjustment may be challenging at first. It may feel scary knowing that you no longer have a steady stream of income from your job . . . and will instead be tapping into the money you’ve worked so diligently to save. But instead of feeling remorse or guilt about the past or anxiety about the future, it’s the perfect time to keep things positive, and do some serious research.

You are going to have to do your arithmetic before you can develop a good retirement plan of action. If you haven’t already, do the research on how to budget, manage, and invest your money wisely. This may require you to develop an entirely new skill set. You have time to read now that you’re retired, right?

In other words, don’t just depend on a financial planner or advisor… learn how to take control of your money on your own. (If you do want to hire a professional make sure you find one who has your best interests in mind, and works on a fee-only basis. This may require you to interview several candidates.)

Have a plan and be fully committed to it by taking action.

Once you know everything there is to know about how not to run out of money before you’re ready to take your last breath, give yourself a list of action steps, i.e.:

• Reprogram your brain for a healthy money mindset.
• Pay off credit card debt. (Start with the one with the highest APR).
• Create a detailed, balanced budget and stick to it.
• Save and invest your money.
• Get all your ducks in a row: create a will, decide on long-term care insurance, set up durable power of attorney for health care (DPAHC), establish a living trust, etc.
• Develop healthy habits.
• Stay motivated.
• Live in the moment.
• Enjoy your new, successful lifestyle!

When it comes to your financial well-being, you’ve got to be completely honest with yourself. It’s important to get clear about what you need and what you need to do. You must know exactly how much money you have and exactly how much you spend.The first step is to figure out your actual net worth. To do this, you may want use a retirement calculator. (They are especially useful if you are newly retired or about to retire.) The calculations may be a reality check on how much you currently have to spend over the course of your lifetime.

The T. Rowe Price Retirement Income Calculator is a good one for those of you already in retirement. All you have to do is enter your income sources such as Social Security, pensions, brokerage accounts, annuities, assets . . . and it projects the likelihood that your current plan is sustainable through life expectancy; it even provides suggestions (such as reduced spending) to maintain your current situation.

Get out of debt now… it’s an emergency!

There is no point in saving if you have debt. If you have a current balance on any of your bank accounts, you need to do everything possible to pay it off. If you want to buy something, you cannot buy using credit as an option.

You may be dying to buy that $1,400 cell phone, and that’s fine, but budget for it and save for it and pay for it with cash that you actually have. Paying more interest on your credit cards than you are accruing in your savings or brokerage account is ludicrous, and can be detrimental to your retirement.

The more rigorous debt payoff method you implement the better. Every dollar you manage not to throw away builds your skill at saving money and learning to spend it more efficiently.

After your credit crisis has passed, you should start stabilizing your finances. Most importantly, your spending should be less (preferably much less) than your current income. Bankruptcy expert and a U.S. Senator, Elizabeth Warren, outlines in her book, All Your Worth, that 50 percent of after-tax income should go to your needs; 30 percent should go to your wants such as clothes, travel, eating out, and entertainment; and 20 percent should go to savings.

Get balanced with what comes in and what goes out.

This 50/30/20 budgeting structure can serve as a foundation to build up your retirement fund for the lifestyle you want. There are plenty of other budgeting systems that typically share the same goals: to help you move away from living check to check, payout to payout—vulnerable to every little economic setback.

With your incoming and outgoing numbers in front of you, create a balanced budget spreadsheet online in Google Drive.

If you still buying things on credit at this point, please stop or only in case of emergency. Do not, however, do not use emergency to build up debt again. You should pay off your credits in full every month, since carrying a balance does not help you save.

Once you’ve gone through your budget, look at it as a sort of wake-up call. Most people should be saving at least 10 percent of their income and putting it into various retirement and/or savings accounts. If you’re not doing that—or even if you are—you need to look at this budget to see where you can do a better job of cutting back on spending and adding to your savings.

You may have lost big with investments or made mistakes in your youth that have left you with the bare minimum, but that was the past… this is now. It is time to come to grips with what is.

If you discover you have no place to cut back, you’ll have to look long and hard at the big-ticket items on your budget: mortgage/rent and/or car. It may be time to downsize and opt for new living arrangements and public transportation.

There are many wise ways to spend your time and save your money.

You’ve probably heard this advice, “Spend your money wisely.” Well, now that you are retired or near retirement age, you have to be completely in charge of how you spend your money, if you want to live comfortably within your means. And you need to be totally in control of any impulsive spending and/or compulsive spending.