
If you are worried about money before you retire, you are not alone. Many of us have to deal with financial stress and uncertainty at this time of our lives.
It is proven fact that financial concern is one of the most common stressors in modern life. The recent economic difficulties mean that many retirees and pre-retirees are now facing financial struggles and hardship.
A recent study by Finance of America Reverse shows that ‘the majority of retirees and pre-retirees are not financially prepared for retirement and lack sufficient savings to fully retire at age 65.’
Like any source of stress, financial problems can affect your mental and physical health, your relationships, and the quality of your life overall. But no matter how difficult your financial situation appears, there is help available.
By tackling your money problems, you can find a way through financial hardship, reduce your stress levels, and take back control of your finances and your life.
These simple steps can help you ease the stress of money problems and find stability again.
Ignore the financial markets.
The financial markets are down, and the economic forecast looks gloomy.
However, if you look at the stock market history, the market highs were not that long ago. The only thing we know is that the financial markets are unpredictable. But the good news is that we can be relatively certain about the long-term positive outlook for the markets.
That is why we should not pay too much attention to the ups and downs of the markets in the short term and set an investment strategy of a diversified portfolio of mutual funds, stocks, and bonds for the long term.
Then we can forget about financial markets except for once every 6 months or a year when you need to rebalance your portfolio. If you are 5 to 7 years away from retirement, make sure that you are not carrying too much risk or wasting your money on investments that are not generating a decent rate of return.
Also, make sure that your current portfolio meets your investment goals. If the market caused a shift in your portfolio, you need to rebalance it to maintain the original asset allocation strategy based on your age and risk tolerance.
How to Build the Best Retirement Portfolio
Maintain a detailed financial plan.
Financial stress can be caused by a wide range of different money problems. The important part is to find a potential solution.
A detailed financial plan means that you know:
- How much money you have now
- How much money you will save by your retirement age
- How much money you will need through your retirement years
Many people in their 50s and 60s have had a hard time creating a good retirement plan that accurately reflects how much money they will need in retirement.
But you need to have a clear, big picture of your finances. Knowing exactly how much money you have coming in and going out prepares you mentally and emotionally for cutbacks. You will know what your necessary living expenses are and what you cannot afford.
Moreover, the clarity makes it easier to plan for the future. This knowledge can give you the motivation to save more, spend less, and work longer so you will not run out of money in retirement.
The plan to address your financial problem can include the following parts:
1. Identify your financial problem.
Take inventory of your finances including your monthly income, debt, fixed and other expenses. Having taken inventory of your finances, you should be able to see any money problems you are facing. It may be that you do not have enough income, too much credit card debt, or you overspend each month and do not save enough for retirement.
2. Create a solution.
Come up with a plan for how to address your financial problems. If you are close to retirement you may decide to downsize your home, move to a smaller or more affordable place, downsize your cars, and reduce your car payments. Although, maybe you need to get rid of your debt and save more money in your 401(k) plan.
3. Put your plan into action.
Be specific about how you will follow the steps of your plan. If you want to eliminate debt, start by listing all your debts, then decide which debt will be paid off first, and by what date. After that, carry on with all other debts until it all paid off completely.
4. Monitor your progress.
Do not get stressed and upset by setbacks. We are all human and it is only natural to get stray from your goals. Many things can go wrong in life or something unexpected could happen. Do not be too harsh on yourself. But get back on track as soon as you can.
Here are a few related posts you might want to read:
- Planning for Retirement in Your 50s
- Checklist for Retirement Planning in Your 60s
- Everything to Know Before You Retire
- Is It a Good Time to Sell and Downsize Your Home?
- Should I Pay Off a Mortgage Before Retirement?
Reduce Debt.
Why is it so important to reduce debt?
Debt is always a slippery slope -the interest will eat massive chunks of your spending money, making budgeting difficult. When possible, avoid debt by paying it off fast and not creating new debt.
When you carry high-interest credit card debt it affects your credit score and your financial progress. Once your debt is paid, you can focus fully on saving, investing, retirement planning, and other financial goals.
There are two popular methods to get out of debt faster. The Avalanche Method helps to reduce the debt that carries the highest interest rate. The Snowball Method helps to get rid of debt with the lowest balance first, and then move on to the next lowest one.
The way the snowball approach works is you arrange all of your debts from largest to small ones. Pay off your smallest debt first. Then once the smallest debt is paid off, the money you were paying toward it will be applied to your next smallest debt.
With the avalanche approach, you will start paying off the debt with the highest interest rate and then move to the next highest.
Debt is always a big weight on your budget. The faster you can get rid of it, the faster you can get ahead.
Here are other strategies to help you reduce or pay off debt faster:
- Refinance a home loan, student loan, or a personal loan
- Negotiate for a lower interest rate on credit card debt
- Transfer credit card debt to a 0% balance-transfer credit card
- Negotiate for a lower interest rate on a home equity line of credit (HELOC)
- Make bi-weekly mortgage payments
Create a backup plan.
One of the biggest worries about money before retirement is that you do not know what will happen in the future.
You do not know if it would be enough to maintain your lifestyle in retirement and if you would run out of money later when you are in your 80s or 90s.

When you retire, you do not have the security of your job to rely on and have to live on a fixed income. While you cannot exactly plan for the unknown, you can create a backup plan.
First, start building your emergency fund before retirement as your baseline. Your emergency fund should give you peace of mind because it helps you cover large or unexpected expenses.
Many experts recommend aiming for an emergency fund with 3 to 6 months of living expenses. Sometimes you need to increase the fund for up to 12 months. Even though your emergency fund cannot cover everything, it can still reduce the money you have to borrow from your family or use credit cards and increase your debt.
You should never tap your emergency savings for expenses like leisure travel, holidays, or wedding gifts. These expenses are non-emergency expenses.
A true emergency is a situation when you have:
- Major car repairs
- Health emergency co-pay or large deductible
- Unexpected home repairs
- Emergency travel
The next part of your backup plan should include the part when everything goes wrong. When you see that you have options to deal with the worst-case scenario, you will feel less stress.
Your backup plan might include:
- Reduce living expenses when times get tough
- Find part-time work or start a side gig
- Use your emergency fund
- Tap into your home equity through downsizing or reverse mortgage
Manage your overall stress and focus on happiness.
We all know that financial stress is not good for health. Financial anxiety negatively impacts not only our health, but our mood, home and social life, marriage, and ability to pursue our dreams and passions.
Unfortunately, in the current economic climate, it is unlikely that our financial difficulties will disappear overnight.
However, it does not mean we have to give up. Perhaps, we need to take small steps to ease our stress levels and focus on happiness and not money.
Everyone’s dream is to have a happy family and be financially secure. So, if you want to be happy and have a secure retirement, try to:
Stop accumulating stuff – Spending money on accumulating stuff does not bring happiness and might put you in debt. Downsize and de-clutter your home, so you can spend more time enjoying your life rather than maintaining it.
Think about experiences – It is a proven fact that you are happier when you spend your money on experiences than on stuff. Accumulating more stuff does not make you happy but doing interesting things do.
Focus on your priorities – Know what is important to you and stop worrying about the rest.
Express gratitude – Be grateful for the good things in your life. It is easy to focus all your attention on the negatives when you are overwhelmed by financial uncertainty and money worries.
While you do not have to ignore reality, you can be grateful for many small things in your life. Take a moment to appreciate the beauty of the sunset, flowers in your garden, a gorgeous sunny day, or just a good book.
In conclusion, our ability to feel grateful increases as we age. Regardless of your financial situation, retirement is the time to make the most of your life.
If you want to have a successful retirement, focus on what is meaningful to you. Remind yourself of all that you have accomplished, the valuable skills you can offer, and support from family and friends.
Find time to be grateful for many simple things such as your health, a close relationship with your kids and grandkids, your favorite hobby, or even money in the bank.
Find ways to be kind and to help others. These efforts help you see beyond your own financial problems to give something back to the world.
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