There have been many teachers retiring across the USA over the past few years but that is about to change as many more teachers begin retiring. The baby boom is upon us. If you are given a “Golden Parachute” deal, then the adjustment to retirement can be especially mind altering. Ok, so this is what you do if you have taken the “deal”:
1. This may be sudden but you have been thinking about this for quite a while, so don’t panic, although what you are going to feel is normal. The effect of a Golden Parachute is more emotional than logical so don’t feel that you are alone, everyone goes through the move to retirement, and this anxiety will pass.
2. This is a very good time to review your income. Know your sources of income and how it will be sent to you, monthly, quarterly or semi-annually. Whatever the case, compare the income to the outgo. Do a spread sheet that illustrates by month how your income will arrive.
3. Review the third Lifestyle in my book, Teacher’s Pocket Guide to Finance.
4. Consult with a fee based financial consultant if you have any doubts in your financial future. You should have started this proces months ago.
5. If you received a lump sum distribution or will receive payments for the Golden Parachute, use those funds for living expenses and continue allowing your retirement accounts to grow untaxed.
6. Draw funds from taxed accounts before you begin to draw down your retirement accounts, defer, defer, defer your taxes when possible.
7. Give yourself 6 months to one year to fully appreciate retirement. During this time the income stream from your pension, savings and investments will make more sense. It takes time to absorb the move to retirement, everyone feels it, some more, some less.
8. Begin trimming expenses when possible but don’t obsess! Having an accurate checking account leads to better cost and cash controls. Once you reconcile the new income stream with monthly bills, you will feel a measure of relief over time.
9. Do not succumb to pressure of financial hawkers! At this time, make slow deliberate moves with your assets. If you have a lump sum to invest, review my description of Dollar Cost Averaging and Laddered Bond Portfolio in the Teacher’s Pocket Guide to Finance.
10. Get in good physical and financial shape and learn to eat for a long life. The stress of the job will fade and you will experience a new type of freedom that is more relaxed than stressed. It is what you worked for, so enjoy.
Until next time, love long and prosper!