Questions to Ask Yourself Before You Retire

Retirement planning takes on added urgency the closer you get to leaving your job. Imagine your future by looking at the major factors: housing, activities, lifestyle, life expectancy, and unexpected events.

The first thing to do in planning for retirement is to imagine how you want to live during that time. This will help form your budget and your retirement income plan.

If the numbers don’t support the life you have in mind, now is the time to find out. You can always make changes. For example, you could work more now to avoid working later. Another option is to cut back on expenses in order to retire earlier.

But what you want to avoid is the need to make major adjustments ten or twenty years from now. The more accurately you can answer these questions, the more likely you are to create a retirement income plan that will sustain you throughout life.

Where will you live?

The answer to this question affects not only housing costs, but other living costs as well. Whether you choose to move or stay put, consider the following:

●      Proximity to children and grandchildren. If your family lives far away, you should plan for travel expenses and have room for them to stay when they visit.

●      Affordability. Many people opt for more affordable living costs when they retire. Living costs are determined by factors such as housing prices, food, utilities, transportation expenses, and various taxes. These taxes include state income tax, property tax, and sales tax.

●      Employment and business opportunities. If you plan to work during retirement, consider the job market for your desired field. Also, think about the business climate if you want to start a new business.

●      Travel plans. If you plan to travel frequently in retirement, think about living in an affordable condo near the airport. Avoid having plants or pets until you no longer want to travel. If and when it does, you can reconsider the housing question again.

●      General preferences. Otherwise, consider the classic criteria for choosing a retirement location. These include climate, cultural and recreational opportunities, access to medical care, and other lifestyle issues.

What will you do?

How you plan to spend your time in retirement will largely determine how much income you’ll need. Consider if your planned activities will increase spending or income in retirement.

●      Expense-generating activities. The classic life of leisure can be expensive! Unless you plan to spend your days reading, walking, and visiting with friends, you may be facing higher-than-anticipated costs for travel, hobbies, and entertainment. Even classic low-cost activities such as gardening have associated expenses.

●      Income-generating activities. If you like to work, why not make that one of your primary activities during retirement? It’ll save money on hobbies and entertainment and generate income to boot. Even volunteer work pays off if it keeps you from engaging in expensive activities.

If you want to start a business in retirement, hopefully it will make money. But you may need to prepare for several years of start-up expenses before the business becomes profitable.

How well will you live?

Living well is in the mind of the beholder. As you contemplate retirement, consider how you will live your life.

●      The simple life. Some retirees look forward to scaling back in retirement in order to reduce expenses and have what they would deem a very rich life. Grow your own vegetables. Prepare meals at home. Ride your bike. Take long walks. Read good books. You can do a lot with a little.

●      The high life. Some retirees have worked in an office for many years. They may see retirement as a chance to fully enjoy life. They have a good retirement fund and enough money to live comfortably. They can enjoy dining out, traveling more, and pursuing expensive hobbies. They can live the life they've always wanted.

How long do you expect to live?

This is the million-dollar question that, if answerable, would make retirement planning so much easier. People are often confused by tables showing the median life expectancy. This is the age when half of the population has died and the other half is still alive and needing money to support themselves.

It has virtually no bearing on any individual’s true life expectancy. The safe route is to plan for retirement income to last to age 95 or 100.

What surprises does life hold in store?

What unexpected events might you anticipate as you move through life?

●      Your health. Your genes, health history, and lifestyle can provide clues about your future health as you get older. However, predicting your health in retirement is still uncertain. Fortunately, Medicare and supplemental insurance can take care of the major costs.

●      Your family. You never know when a family member might need your help. If your parents are still living, one or both might need personal or financial support as they age. And your children aren’t immune to life’s surprises, either. A job loss, divorce, or health shock could send them to you for help just when you think your life is on an even keel.

●      The economy. Some say the financial crisis of 2008 was predictable; others say they never saw it coming. The lesson that came out of it is that anything can happen, including events beyond our wildest imagination. Adaptability is the key to managing life and money in the 21st Century. Pay attention and be ready to respond.

●      Disasters. Does it seem there have been more, and greater, disasters in recent years? Flooding, earthquakes, tsunamis…what’s next? Get your insurance paid up, your disaster kit ready, and hope for the best.

Bottom Line

Retirement planning is an essential process that becomes more critical as you approach the end of your working years. By thoughtfully considering factors such as housing, activities, lifestyle, life expectancy, and unexpected events, you can create a retirement plan that aligns with your vision of the future.

Disclosures:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.