Simply Money: Want to thrive during retirement? Focus on these four things

This post was originally published and is credit to this site


Nathan Bachrach and Amy Wagner Published 3:21 p.m. ET June 12, 2019 | Updated 3:21 p.m. ET June 12, 2019

Every week, Allworth Financial’s Nathan Bachrach and Amy Wagner answer your questions in their Simply Money column. If you, a friend, or someone in your family has a money issue or problem, feel free to send those questions to yourmoney@enquirer.com.

Kirk in Alexandria: There’s so much focus on money when I read about planning for retirement. But what about everything else? How should I plan for my actual life in retirement?

Answer: As you’ve correctly pointed out, there’s much more to retirement than just numbers. After all, even though you’ve probably been saving for decades, you’ve never retired before. And most people have no idea what comes next – which can be scary! But if you plan ahead, it doesn’t have to be.

Here are four pillars we believe you should focus on as you approach retirement (and once you’re in retirement) so you can not only retire better, but thrive as well:

Health and wellness: We’re obviously not doctors. But according to our research at Allworth Financial, both health and wellness are the top factors of a happy retirement. Make sure you’re eating well-balanced meals, staying active (even walking just 20 minutes a day counts!), and doing mental exercises (such as learning a new hobby). 

Prosperity: This isn’t about wealth, necessarily. It’s about achieving financial confidence. For instance, do you have enough money to retire on your terms? Can you be completely debt-free by retirement? Are your wills, trusts, and beneficiaries up to date?

Purpose: To some people, retirement means kicking back and slowing down. And that’s fine. But our research suggests that, instead, you should try scheduling the same number of activities you were participating in before retirement. You need to find purpose for this new stage of life, just as you (hopefully) had when you were working. Consider volunteering or taking classes in a subject that’s always fascinated you.

People: When you leave a career, the sudden loss of friendships can be jarring. Staying connected with people is key in retirement. Make sure you avoid long periods of isolation, create a weekly schedule to see family and friends, and try limiting your exposure to TV and social media.

Here’s The Simply Money Point: Great retirements are continually evolving. But above all, be sure you’re making your health and social activities a priority. 

CLOSE

Allworth Financial Advisors discuss tips for saving money when you want to see concerts. Allworth Financial, Cincinnati Enquirer

S.K. from Brown County: I’m starting a new job that offers a 403(b). I’ve never had one before. Is it any different from a 401(k)? 

Answer: The 401(k) and 403(b) are very similar retirement accounts (both are named after a section of the tax code). However, there are a few subtle differences. For instance, companies in the private sector offer 401(k)s; non-profits, religious organizations, school districts and local governments offer 403(b)s. 

Let’s first outline the similarities: Both types of accounts are tax-deferred, meaning you get a tax break on contributions now but then pay ordinary income taxes on withdrawals is retirement; both also allow for employer matches (though they’re not as common with 403(b)s); both have the same basic contribution limits ($19,000 for 2019; $25,000 if you’re 50 or older); both force you to take Required Minimum Distributions (RMDs) at age 70 ½; both offer Roth options (an account in which earnings can be withdrawn tax-free in retirement and don’t have RMDs).  

Next, the differences: 401(k) plans generally offer more investment choices – such as mutual funds, exchange-traded funds and even individual securities – while 403(b) plans are typically limited to mutual funds and annuities. Additionally, workers using a 403(b) with at least 15 years of service at the same organization whose annual contribution was less than $5,000 on average can sometimes contribute up to an extra $3,000 a year (a lifetime limit applies). There is also less regulatory oversight for 403(b)s which can put more of the responsibility on participants to manage their accounts.

The Simply Money Point is that, at the end of the day, a 403(b) and 401(k) are both great ways to save for the future. Be sure you’re taking advantage.

Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Retirement planning services offered through Allworth Financial, a SEC Registered Investment Advisor. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Call (513) 469-7500 or visit allworthfinancial.com.

Read or Share this story: https://www.cincinnati.com/story/money/2019/06/12/simply-money-thrive-during-retirement-focus-these-four-things/1433927001/