Ask Yourself The Right Retirement Questions
If you are like most people you want your path to retirement to be seamless, smooth and stress free. Envisioning the type of lifestyle you will have in retirement is the easy part of retirement planning. The more difficult part is deciding whether or not you are “ready” for retirement. Do you know if you are “ready” to retire? You will have a better idea after you ask yourself the following 3 critical questions:
Question #1 – Have You Evaluated Your Expenses?
Do you know what expenses will you likely encounter when you retire? Your retirement lifestyle will be most likely be different from the lifestyle of your working years. Before retiring you should work at eliminating as many expenses as possible. The more expenses you eliminate or pare down before retirement the more stress-free your retirement will be.
For those expenses that you cannot eliminate try to at least reduce them before retiring. Another smart financial move is to have a financial cushion to offset those expenses you never planned for.
You Cannot Avoid Expenses
- Major expenses that may carry but should eliminate if possible may include a mortgage, car payment or large credit card debt
- Health care costs are unavoidable. During your working years health care was most likely paid for by your employer paid but in retirement that expense will be coming out of your wallet
- Other expenses that you cannot avoid include food, housing, clothing
- Incidental expenses that you may have dreamed about but never saved for may include entertaining costs, the expense of golfing every day, traveling the world or engaging in a hobby
Question #2 – Have You Determined Your Income Need?
How much income will you need to cover all of your expenses? You may not be ready to retire if you do not have a guaranteed income in retirement that will last as long as you do.
Are you living on a budget? A proven method of monitoring your income and expenses is budget living.
Question #3 – Where Will You Get The Money?
The key to a stress-free retirement is to generate a source of income that will help maintain the same financial lifestyle that you had during your working years. Have you determined what income sources will be available to you in retirement? Have you calculated how much income each of those sources will generate for you?
Some general sources of income that many retirees rely upon include: Social security, pension income, 401k and IRA distributions, investment dividends and annuity income.
Your retirement should be a relaxing time of your life, not a stressful one. Avoid the stress, ask yourself the right questions before retiring. Then take the appropriate steps to prepare the way for the retirement lifestyle that you deserve.