You’re on a beautiful golf course. It’s a sunny afternoon. Once you finish the 18th hole, you’re on your way to meet with friends for lunch at the new restaurant on the corner. Perhaps you prefer putting your life skills to work by volunteering at a charity or maybe working part time at the local home supply store. ‘Tis retirement. You decide how you spend your leisure.
You’re no longer constrained by the demands of a job or a work routine. You set your own schedule. You choose how you’ll spend your day. Those long years of employment are over, and you’re setting sail for your golden years, on your own terms.
Questions and concerns about retirement
While the scenes described above appear idyllic, they do require preparation and planning.
How do you envision your retirement? What do you want it to look like? And, most important, what do you plan to do, and what kind of retirement strategy will you implement during your working years to pursue your retirement goals?
Those are some of the questions you should ask yourself. In the years prior to retiring, you should begin painting that picture. You’ll have to compare and contrast your retirement dreams with your financial ability to sustain a comfortable lifestyle.
Here are additional questions to consider to help you shape your financial strategy:
How long do you want to keep working full time? Are you interested in taking part-time work once retired? If so, do you want to pursue something in your current profession or try something new?
Once you’re retired, with or without a part-time job or doing charity work, what types of hobbies or activities do you wish to do?
How do you want to spend most of your time? If you’re so inclined, plot out your typical day of retirement.
Sometimes planning for retirement and being retired can feel like work. But the “work” is necessary. After all, you can probably expect to live nearly another two decades[i] or more, according to estimates.
Are you healthy?
As you dig deeper into developing your plan, consider these questions: Are you healthy? What do your genetics reveal about your longevity? Does your family line have predispositions or tendencies to certain conditions (heart disease, cancer, diabetes)? In other words, what do you think is your projected lifespan, and how do you expect to maintain an active lifestyle during those years?
As you start laying out your retirement plan, you also have to assess your financial condition. The federal government requires seniors to make minimum withdrawals (required minimum distributions) from certain accounts, including your IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts at the age of 70 ½.[ii]
Basically, you have to look well into the future—sometimes as much as 35 years or more depending on your health and lifestyle—in determining your budget. To oversimplify it, how can you make your retirement savings stretch across several decades or so of retirement? Your investments have the potential to continue generating interest income over your retirement.
Don’t forget your health maintenance. Medical expenses, which may include long-term care, in the later years of retirement must be factored into the equation. Some estimates put health and medical costs for a retired couple at $280,000.[iii]
Shifting gears
The shift from work to retirement can feel jarring. Some people ease into it while others take the leap. After retiring, some retirees, still healthy and active, work part time to keep income at a comfortable level.
Delaying taking Social Security allows retirees to increase their benefits by about 8% per year after their full retirement age to a maximum of about 125% of your full retirement age amount.[iv]
Consult with a financial professional to help you wade through the financial morass of retirement preparations. Financial professionals have the tools, the resources, and the experience to help you develop the most productive retirement plan to suit your needs.
If you’d like more information about your financial options or to learn more about your financial needs, contact us today.
[i] https://www.forbes.com/sites/wadepfau/2016/08/25/how-long-can-retirees-expect-to-live-once-they-hit-65/
[ii] https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions
[iii] http://time.com/money/5246882/heres-how-much-the-average-couple-will-spend-on-health-care-costs-in-retirement/
[iv] https://www.ssa.gov/OACT/quickcalc/early_late.html
