Can You Even Afford Retirement | Give It A Trial Run

Afford retirement

Find Out If Retirement Is Affordable

Do you know if you are financially ready to retire?  How does anyone know if they are ready?

Determining that you cannot afford retirement after you quit working is not the best time to learn that.

Put your retirement through a trial run before you sign your exit papers at work.    It’s all about money at retirement; if you retire without enough, you may regret it.

Step #1 – Review Your Plans

Your Health Care Plan

  • Ask your human resource department about your health care coverages after retirement.  Which benefits stop, which ones continue?
  • How much will the premiums be?  Can you afford those premiums?
  • Payroll deductions of premiums are no longer an option once you are retired.
  • Are there cheaper health insurance plans outside of the one offered by your former employer until you get on Medicare?
  • Shopping for health insurance can get complicated, shop it anyway.
  • Different carriers offer different packages at different prices.
  • Find a good broker to work with; ask your auto insurance agent for a referral.

Your Life Insurance Plan

Almost all life insurance offered through employers end at retirement.  That makes sense, your employer is no longer responsible for you so why would they continue to make the premium payments for you.   Check with your employer before retiring.

Your need for life insurance does not stop just because you quit working.

  • Buy life insurance outside of work before retiring, it’s cheaper.
  • The best way to keep the premiums down is to buy life insurance as young as possible.
  • Consider a term life insurance policy at retirement age vs a cash value policy.
  • Term policies are cheaper.
  • Your auto and home insurance agent can get you quotes.

Your Social Security Plan

  • Call your local social security office to determine what your benefits will be.
  • Go online to the social security website; it has a worksheet to help you navigate through your benefits.
  • Work with a financial planner to confirm any benefit numbers you come up with.

Step #2 – Review Your Finances

Can you afford retirement?
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Fixed Income Status

You will no longer be receiving a paycheck.   You will be living on a fixed income; your retirement investments and social security.

Can afford to live on a fixed income; will it cover all the expenses that your paycheck did?    If not, can you live on less?   Try it, lower your expenses before your pay checks stop and see how you do.

If you pay off your mortgage, credit card debt and any other large debts before retirement, living on a fixed income of retirement investments and social security may be more manageable.

Work With Accurate Numbers

Before retiring run your numbers through a retirement calculator.

Honest input equals honest output.    The calculations from these retirement calculators are as accurate as the information you provide.  Be honest with yourself on the figures you input, you will get results that are workable.

The results from the retirement calculator may surprise you, your numbers may be right on target you may be able to retire on schedule; or you may have to work a bit longer.   Isn’t it better to know what you can afford before retiring than after?



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