The period when you transition into retirement is one of the most important times in your life. It is comparable in importance to the period when you transitioned into adulthood, roughly between the ages of 20 and 30. Think about it: Your decisions during that time had an impact on your life with an impact that probably lingers to this day.
Keep this in mind as you decide how much time and effort you want to spend on planning ahead as you transition into retirement, which for most people is somewhere between age 60 and 70. Your decisions during this time will affect your quality of life for the next 20 to 30 years.
However, before you make any important choices, you’ll want to do some homework that will give you the information and insight you need to make the best possible decision.
Let’s start with these:
focus on the big questions
Here are the most important questions and decisions to focus on:
- When will you retire from your current job, and will you work part-time for a few years after you retire?
- Do you have enough retirement income to support the life you want?
- Are you adequately prepared for the common risks during a long retirement, including paying for health care, inflation and stock market crashes?
- Where is the best place for you to live after you retire?
Of course, there are many more important decisions you’ll have to make, but start with these before adding any others to the list.
prepare your plan
To help you answer the big questions above, think about your goals for the life you want in retirement. ask yourself who what when where why of retirement:
- With whom do you want to spend time?
- What do you want to do during retirement?
- When would you like to retire?
- Where do you want to live that will best support the life you want?
- Why do you want to retire? List both the positive benefits you expect from retirement and the negative things you don’t like about working.
If you are married or living with a partner, you will want to discuss these questions with them and include them in the most important decisions.
You’ll also want to list all of your financial resources, including:
- amount in your retirement savings
- Your expected Social Security retirement income is the age at which you want to retire. Be sure to determine how these benefits can increase if you delay starting benefits at a later age.
- Amount of any pension income, if applicable
- your home equity, if applicable
- Any other assets or income that may help support your life in retirement, such as whole life insurance, income from a business or part-time work, or income from rental properties
You will also want to prepare a list of any debt you have, such as from mortgages, credit cards or student loans.
When you’re taking inventory, you’ll want to locate and store important documents, such as details of your retirement and savings plans from your employer, medical insurance policies, whole life insurance policies, loan documents, and any that describe Other documents Your benefits and your rights.
prepare a retirement budget
You’ll also want to budget your regular monthly expenses in retirement, including your mortgage payment or monthly rent; transportation costs, including gas and car insurance; Meal; utilities; premiums for medical insurance; and entertainment.
When preparing your budget for your regular monthly expenses, be aware that premiums for medical expenses and out-of-pocket medical costs are things that can change significantly when you retire. Before you become eligible for Medicare at age 65, you may pay very high premiums for medical insurance. Once you become eligible for Medicare, you need to carefully examine your plan options before choosing which plan to go with. Premiums and out-of-pocket expenses for Medicare, a Medicare Supplement plan if applicable, and a prescription drug plan can be important, so you need to understand these amounts when you’re preparing your retirement budget.
You’ll also want to list expenses you don’t incur on a monthly basis, such as property taxes and homeowner’s insurance.
The ultimate goal
The ultimate goal of your homework is to help you understand whether you can satisfy the “magic formula” for retirement security for the rest of your life:
i > e, either
income over expenditure
In fact, this formula isn’t really magic – it’s just common sense.
It’s likely that you’ll have to spend a lot of time completing your retirement homework, but it’s well worth the effort considering what’s at stake.
Credit: www.forbes.com /