The average life expectancy is increasing each year, with advances in medicine and a trend in health consciousness. People are living and thriving 15-20 years after retirement, and even longer in many cases. Regardless of your goals for retirement, financial preparation will help you make the most of post-retirement years.
When that regular paycheck stops coming, and social security becomes your new source of income, your lifestyle will change drastically. Suddenly you are depending on your savings and retirement plans. That is, of course, if you already have a financial plan for your future in place. It’s never too early or too late to start planning for retirement. The following steps are considerations to take when determining your post-retirement goals and expectations.
Think about and prioritize your retirement goals
What does your ideal retirement consist of? Do you want to travel to places you’ve always wanted to see? Do you want to spend time with your children, grandchildren and other family, living a more simple life in your lifelong home? Do you want to move south to live in a state with a more consistent climate, no snow and more sunshine?
Consider the Retirement Stages
With the average retirement age of 62, retirees are still thriving, active and energetic. Retirement provides a perfect time to explore the world and travel to those places that you’ve always wanted to visit. Dividing your finances to meet your retirement goals can be a task, but thinking about retirement in stages can help. For example, in the first stage, immediately following retirement, people generally have about 5-10 years of an active lifestyle before they start to settle down. These are the years of freedom, where you will be spending more money than what you have coming in, especially with the halting of a regular paycheck. These years will be the biggest drawers of savings and investments as you fulfill the dreams you’ve saved for your entire life. After the first stage, people often settle back down and prioritize their families once again, living a more simple life at home, which proves less of a stress on the savings and retirement accounts. The third stage consists of limited mobility, where getting up and going is a bit more difficult. Sometimes this stage involves moving in with family, or an assisted living or retirement community. Depending on the arrangements, this stage can again draw heavily from savings and retirement accounts.
Organize Your Accounts
Prior to retirement, get all of your accounts in order. Check with your current and former employers to ensure that you aren’t leaving any retirement accounts untouched. Things to think about include:
- Will you still have health insurance in retirement?
- How will you receive the money from your accounts?
- When can you access the money?
- Will you get a lump sum, weekly or monthly payments?
- Are your beneficiaries correctly listed on your savings and retirement plans?
- Do you have a will, advance directive, etc. in place?
- Can you streamline your accounts and put all your assets in one place?
Create a Budget
Will the money that you have coming in from social security, 401Ks, pensions and savings be enough to cover your monthly expenses? Construct a budget six months to a year before retirement to ensure that you are in a comfortable place financially.
Consider Contacting a Financial Planner
Ideally, a financial planner should be part of your retirement plan at least ten years before you plan to retire. It’s never too late, however to get in contact with a professional who can help ensure your future is secure. When choosing a financial planner, look for the following qualities:
- Credentials, most importantly CFP (Certified Financial Planner)
- Understanding of senior finances and retirement plans
- Positive reviews/References
- Clear background check
- Fiduciary, or someone who has pledged to act in a client’s best interest at all times
- Charges a flat fee versus making money on commission or recommended products
Many retail stores, hotels, restaurants and other establishments offer discounts for seniors. Websites such as SeniorDiscounts.com and AARP can provide a list of resources that offer discounts for people over 50.
Retirement is a time for you to enjoy life and everything that you’ve worked for throughout your life. It’s a time to live your dreams, spend time with your loved ones and take time for yourself. Though proper planning can prove stressful, it’s necessary to ensure you live your post-retirement years to the fullest. It’s a time to relax, live in the moment and enjoy.