Due to the increasing longevity of the general population, your retirement years may stretch into the decades. But that shouldn’t delay your preparations. Having a good retirement is possible with careful planning.
Retiring is a major life transition, and it’s important to be prepared. Here are seven questions you should try to answer before you retire:
- Do you have a retirement age in mind?
- What’s the status of your retirement savings?
- How exactly do you plan on keeping up your current lifestyle?
- Are your assets suited for long life in retirement?
- Do you have your affairs in order?
- Want to Make a Lasting Impact?
- What will you do with the extra time?
Do you have a retirement age in mind?
Sometimes you get to choose when you retire, and sometimes you have to retire earlier than planned. Is it possible for you to retire before that target date because of an emergency? A senior wealth advisor at Hightower Wealth Advisors in St. Louis, Missouri, Jennifer Belmont Jennings, says that life is unpredictable, and you never know when you could be hit by tragedy or face a health crisis. You might not make it to your desired retirement date before you need to retire.
What’s the status of your retirement savings?
Consider how much retirement income you will receive from Social Security, assets, and passive income. Think over your savings and have a conversation with a financial advisor to figure out how long your money will last at a manageable draw-down rate. You may need to keep working, find a job in retirement, or prepare for a lesser living level if your retirement projections are too low. You must account for inflation. While you are unemployed, your living expenses will rise, “Deerfield, Illinois-based Lerner Group Managing Director and Partner J.R. Gondeck said.
How exactly do you plan on keeping up your current lifestyle?
It’s a common misconception that retirement would mean a drop in expenses, yet there may be some things you can do without. On the other hand, you may expect to maintain, and perhaps even see growth in, a large portion of your outlays. After decades of hard work, you may feel like splurging on things like vacations and special experiences. “Everyone assumes you spend less in retirement,” adds Gondeck. More time on your hands will inevitably lead to more spending.
Are your assets suited for long life in retirement?
Imagine how long you will be able to relax after retirement. As a result, many individuals now reach their 90s and beyond. In retirement, your lifespan may outlast your working years. The amount you need to save and how that money should be invested will become clearer after reading this, Jennings promises. If you plan on staying retired for 30 or 40 years, a large portion of your savings will need to be invested over the long haul.
Do you have your affairs in order?
A will or trust, a living will, and a power of attorney for medical and health care issues. All o the above are important financial documents to have in place. In the event of your passing without a will, your loved ones will have to deal with the emotional and financial fallout of your passing, as well as the practical issues of paying bills, locating financial and legal paperwork, and retaining an estate counsel.
Want to Make a Lasting Impact?
Some people want to use their savings for enjoyment in retirement, while others hope to pass something along to their offspring or a good cause. “Some individuals are going to blow their entire budget, and for some people, it’s incredibly vital to make sure that they’re leaving something to the future generation,” adds Gondeck. The manner and the amount of money you save will shift as a result.
What will you do with the extra time?
Along with your financial plan, you should decide how you want to spend your retirement. In your 30- or 40-year career, you used to work eight to ten hours per day, and now you have that extra time, Gondeck says. During your retirement, think deeply about how you will spend your time.