Financial planning during retirement is essential. Because your retirement income probably will come from more than one source, you must know what they are and understand their limitations. Common sources include Social Security benefits, company pensions, income from postretirement employment, and personal savings. If inflation rises to unexpected levels, your income may become inadequate. Now, the Federal government adjusts your Social Security income for inflation each year in January. However, Congress could change these rules. Also, your company pension may not keep pace with inflation. When this happens, you must make up the rest of your retirement income needs with postretirement employment and personal savings. Managing your income carefully will help you maintain your lifestyle during your retirement years.

Reducing Everyday Expenses

Plan your spending carefully during retirement, especially if your assets are few and your income does not increase with inflation. Analyze each item in your budget. Pay special attention to major expenses, such as food, utilities, transportation, clothing, and health care. Remember that inflation will take its toll on your purchasing power. When prices rise, you will either have to reduce your spending or increase your retirement income.

Working During Retirement

Many people who retire start a second worklife either to supplement retirement income or to remain active during their retirement years. Should you decide to work again, consider a business operated from your home. When selecting a business, look for one that requires a small capital investment. You do not want to jeopardize your retirement assets.

A service business may be more appropriate than one involving merchandise. With a service business, you do not need to invest in inventory. You also might consider what you like to do and are good at. There may be a need in your community that you could fill. Use your lifetime experience, profession, talents, and abilities as guidelines. Do you know a trade or have a hobby that you could teach others? If you have always maintained your own home, you might become the neighborhood repairperson. A telephone service to wake up sound sleepers or check on elderly people is another idea. If you live in a historic area, you may be able to be a tour guide. If you like to travel, you could make a business of transporting other people's cars to Florida. Individuals with sewing skills could start a clothing alteration business.

One advantage of these businesses is that you can work as much or as little as you want and on you own schedule. Often the only money you will invest is the cost of a few newspaper advertisements. For information on starting a small business, contact the Small Business Administration. The telephone directory lists the local offices under United States Government. Also be aware there may be local regulations related to home repair businesses and driving cars for others.

If you would rather work for others, consider part-time service jobs in retail stores and offices. Do not overlook the chance of working weekends. If there are no jobs, trade your skills with your neighbors for services you would normally have to pay for. Some communities have nonprofit barter groups to help with the trading of skills.

Why People Don't Save

People have many excuses for not saving. Some people think that they must first take care of certain financial responsibilities before dealing with others. This first-things-first thinking only leads to costly procrastination. During our lives, we must handle many financial responsibilities at the same time. We don't say, "I'll wait until my children are grown before I give to my church," or "I'll wait until I've paid off my house before saving for a vacation or for my children's education."

Procrastinating is very costly for your future financial security. Instead of thinking in terms of an either-or use of your money, which results from a misguided first-things-first belief, think in terms of a little of both. A little spent on something you want now and a little spent on something later will give you a sense of security and peace of mind.

People make excuses that they "can't afford to save" or "don't have the self-discipline to save" and ignore the severe consequences of not saving. You can have enough money for a financially comfortable retirement without working yourself into an early grave and without depriving yourself of a fulfilling life.

How Does Your Financial Future Look?

Ask yourself these questions about your future:

• Is a safe, secure, and comfortable future something I really want?
• Do I want a secure future as much as something to buy?
• What kind of picture do I have of myself retired? Is it a hazy, gray, or dark picture, or is it a colorful one in which I am financially secure and enjoying life?