About 10,000 Americans are retiring every day! Retirement is on the horizon and I know you’re anxiously awaiting that glorious chapter of your life. But are you really ready?
Even if you’ve been saving in your retirement plans for years, there are still some things that you should do to make sure that you’re fully prepared. Afterall, you only retire once so you can’t afford to make mistakes.
1. Crunch the Numbers
Do you have enough money to retire with the quality of life you’re envisioning for your retirement? If you’re not sure of how to do this, you may want to contact a financial advisor who can do an analysis of how long your assets are expected to last. In order to do these calculations, you will need to gather the following information:
- What will your monthly expenses be in retirement? If you’re not sure, you will need to create a realistic budget for your expenses. Be sure to factor in your everyday costs but also don’t forget things like healthcare expenses and certain expenses that only come up a few times a year. If you need help in doing this you may want to look into a service through your bank or an account aggregation service which will help you see what you’re spending and categorize the expenses. If you do this for a few months you should have a good feel of what you are actually spending.
- What income will you be receiving in retirement? For example, social security, pensions, PERA, rental income, etc.
- Take stock of your assets and liabilities. Compile statements from your bank accounts, investment accounts, mortgage, collectibles, or other assets. Also compile a list of your debts such as mortgage, car loans, personal loan, student loans, medical bills, credit card debt, etc.
- Plan for Retirement Fund Withdrawals. An advisor can help you plan for taking funds out of retirement accounts in a tax efficient way and can help you to avoid penalties.
Once you’ve collected this information, you can contact your financial advisor to complete the analysis for you. But to get a correct analysis, make sure that you provide them with all details relevant to your financial life.
2. Plan your Government Benefits
Social Security: When is the most beneficial for you to take social security? What’s the process of taking social security? How much can you expect to receive from your benefits? Are there any life circumstances that would make you, your spouse, or kids eligible for additional benefits? To get an estimate of the benefits, you can sign up on my Social Security for a free report or contact your local social security office. A financial planner can help you determine what age should be the best for you to begin withdrawing from social security.
Medicare: Getting Medicare is a major milestone and can be vital in allowing you to retire since paying for health insurance out of pocket can be very expensive. You can enroll in Medicare 3 months before you turn 65 through 3 months after you turn 65 if you’re not already receiving social security.
3. Consider how you will spend your time
When you retire, you will likely have more choice in how you spend your time, but retirement should be more than simply not working. It’s important for your physical and mental health to have a plan, some structure, and goals you would like to accomplish. Otherwise, you may find that you don’t enjoy retirement as much as you thought you would or you may not live as long as you were expecting. Some ideas to get you started as you brainstorm what you would like to do are:
- Part-time work at a job you enjoy
- Volunteer for a cause that you’re passionate about
- Pick up new hobbies
- Travel domestically or internationally
- Spend time taking care of grandkids
- Be sure to dream and plan your retirement with your partner
4. Prepare other parts of your life
- Consider your housing needs
- Evaluate your health care and insurance needs (life, long-term care, Medicare)
- Review your estate plan: do you have a will?
- Pay off debt
- Have a fully funded emergency fund (depending on your situation)
- Evaluate your health
While you only retire once, our team at ElderAdo has “retired” many times with each client we’ve helped through the process. If you would like assistance with your specific situation give one of our advisors a call to make sure that you begin retirement on the right foot.