4 questions everyone should ask before retirementThis content is categorized as:
For most retirees, a happy and secure future doesn’t happen without proper preparation. To reach this goal, how do you begin planning for a fulfilling retirement that provides the financial freedom to do all the things you wish to do? A good place to start is by asking yourself these four key questions to discover your goals and intentions for the road ahead and help yourself be better prepped financially.
1. How do I want to spend my time?
That’s a big question, but it’s an important one to ask first. If you don’t know where to start, write down all the things you’ve had on your bucket list — even if you don’t think they’re financially possible. Don’t worry about your budget for the moment, just think about how you ideally would like to spend your days as a retiree. Do you see adventure and travel? Spending more time with your grandchildren? Maybe you wish to start a second-act career or pursue a personal passion. Going through this exercise will help you set the stage for how you’d like your retired life to be so you can then build the financial strategy to support it.
2. Where do I want to live?
That’s almost as big a question as the first, because it will guide what you’re going to do with your time. If you want to garden year round, the Northeast might not be your ideal retirement location, for example. Also, consider how much home maintenance you want to do. Maybe you’re not interested in going to a retirement community just yet, but you may want to downsize from the big family home and move into a townhouse that’s easier on your budget and better fits your ideal retirement lifestyle. If you’re considering moving to a state with lower taxes, consider what that will mean in terms of spending time with your family and whether you might wind up spending your tax savings on driving or airline tickets.
For a lot of people, a major factor in the answer to the question of housing is family: How close do you want to be to them? Do you think caregiving for your aging parents will be part of your retirement journey? If you’re part of the 60 million people who belong to the “Sandwich Generation,” you may be balancing the financial and caregiving demands for both your children and your parents. If you think helping care for your relatives will be part of your retirement, maintaining your own financial health — and building retirement savings now — will be essential.
3. Who will I be sharing my retirement with?
If you’re married and retiring together, the answer to that question is an easy one, but it’s important to make a plan together. Also, realize that your lives and time together are going to change, especially if one of you has retired first or spent significantly more time at home while the other was in an office all day. If you’re not partnered up, do you see yourself sharing your retirement years with someone else? Or have you always wanted a Golden Girls–esque life of living with your best friends? This is a big part of your retirement vision and asking these hard personal questions now—whether you’re asking them solo or with someone else—can help secure your plan.
Along with potential caregiving duties in your future, you may also have adult children who will need financial support or will move back home for an extended period of time. While there are many upsides to a multigenerational household, it’s important to avoid financial sacrifices, especially when it comes to your retirement. Seeking retirement planning expertise from a financial professional can help you prepare for these situations and ensure your goals stay on track.
4. Where’s your money?
Having a clear understanding of your personal finances can help you match your goals to your retirement income and what you can afford. You will then be able to make adjustments if need be, whether that includes working longer or part time, changing your current spending and saving habits or scaling down your ideas for the future. Creating a holistic financial picture means calculating your current expenses and separating that spending into your necessities (housing, health care) and cost-of-living expenses (dinners out, club memberships, sports fees).
Next, review all your assets, including 401(k)s, investments, personal savings and annuities. You’ll also want to get an estimate of what your Social Security benefit will be — and how much more you’ll get if you can delay taking your benefit payments. You can find a benefit calculator at ssa.gov to see how much you’ll get when you apply at different times.
While you won’t be able to predict every detail of your retirement, with proper preparation, you can plan for both estimated and unexpected expenses. Take time to explore your retirement goals and connect with your future self. If you’re currently offering financial support to your children and your parents, try to have open discussions about money and how everyone can achieve their financial goals. Keep your own future as a top priority and consider meeting with a financial professional to help make your path to retirement and beyond a rewarding one.
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