Transition to Retirement

Whether you’re close to retirement or just building a plan, the transition from working to retirement is one of the biggest changes that you can make in your life. Retirement isn’t only a major financial shift where you may have to start living off of your savings instead of working and saving. It’s also a major lifestyle change as you regain the time that you spent working.

Full-Time Savings
The amount of money you have saved can directly affect the income you live off of in retirement. All other factors being equal, the more you can sock away, the better off you’ll be. When you start preparing to retire, increasing your rate of savings has two benefits. First, it gives you more money. Second, the more you save, the less you have left over to spend, helping you to prepare for your retirement lifestyle where you may also have to spend less as you stretch your savings.

Preparing Your Credit
Part of transitioning from working to retirement can be handling your debt differently. Some retirees choose to pay off their debt – especially debts with high interest rates – to reduce their monthly expenses. On the other hand, you may want to continue to use credit cards to maintain a healthy credit score and in case you need to borrow money – to buy a car, for example.

Managing Your Lifestyle
Transitioning to retirement may impact your living expenses. Retirement may even save you money in unexpected ways like the reduced or eliminated cost of commuting, dry cleaning business clothes or other business expenses. On the other hand, retirement can also mean that you are free to spend your time as you wish. While this may seem alluring, from a financial perspective, you could potentially end up with more time to spend money.

The Psychology of Retirement
Even more than the financial changes, transitioning from working to retirement can present a psychological challenge. Having free time without the responsibility of going to work can be stimulating. For some people, though, that lack of structure can lead to boredom – and potentially the added cost of spending money to fill the time.

If you’re making the transition from work to retirement, create a budget and keep an eye on your spending. If you’re spending gets out of control, and bill payments are missed, it can directly affect your credit score … and your ability to access credit in the future.


About the Author  
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. Lander holds a Bachelor of Arts in political science from Columbia University.