Wednesday, October 03, 2018

By Barbara Pronin You’ve worked toward it for years, stashed away a nest egg, and now retirement’s around the corner. In a perfect world, you are on your way to years of enjoyment and fulfillment. But unless you have unlimited resources, point out financial planners, being retired doesn’t relieve you of the need for fiscal strategizing.  

Experienced money mavens at The Motley Fool suggest three financial habits new retirees should get into:

Stick to a budget. Whether or not you used a budget during your working years, you need to set and stick to one now. It will keep you from overspending and leave some wiggle room for unforeseen emergencies. Say you plan on withdrawing $12,000 a year from savings to supplement Social Security income for you and your spouse of $3,000 per month. Sticking to a budget will help ensure you spend under $4,000 each month, leaving a little extra to cover a car repair or other expense.

Live below your means. This is one more strategy for making sure you stay under that hypothetical $4,000 a month. The less you spend, the more flexibility you will have when extra expenses strike.

Pay estimated taxes. If you’re withdrawing funds from an IRA or 401 (k) to cover living expenses in retirement, the distributions won’t arrive in a post-tax fashion as your paycheck did. In fact, it will be up to you to decide how much tax, if any, to have withheld. If you don’t have taxes withheld from your retirement plan withdrawals, you will need to plan on paying quarterly estimated taxes. This is especially true if you have income from other sources, such as investments. If you’re not sure how much to pay Uncle Sam every three months, consult your financial advisor, because if you underpay, you risk getting penalized by the IRS.  

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