We know it may seem like your working years will never end, but retirement will sneak up on you. As the years go by, what once seemed like a far-off dream can suddenly feel incredibly close.
Planning for retirement might seem like something you can put off until tomorrow or next year, but the earlier you do it, the more time you’ll have to ensure your finances are in order.
When the time comes to move into retirement, make sure you’re prepared for this exciting new phase in your life by considering the following:
Longevity
Depending on your retirement age, you could live decades after no longer earning a steady income. Scientists are challenging the aging process all the time. Which is all well and good, but it means you have to plan to live longer.
When estimating how long your life could be when retiring, be generous. With a beautiful quality of life, you could be around longer than you think. Make sure you’ve got financial resources to draw from so you can enjoy it stress-free.
Inflation
A few things in life are inevitable, and inflation is one of them. A dollar spent today will likely stretch further than a dollar spent a decade from now.
How you earn money prior to retirement will hopefully match the cost of living, but inflation is still an important consideration. Working with a financial professional can help you see what your retirement could look like in different inflationary climates. Then you can adjust your financial plan accordingly.
Health care costs
Depending on where you are located, having a plan to pay for your health care may be crucial. It’s almost guaranteed that you will become more expensive to care for as you get older.
Ensure you have an affordable way to get the help you need. Don’t forget about prescriptions, vision and hearing care, and other costs such as alternative medicines or equipment. Also, consider whether you’ll need to travel for medical care. Transportation probably won’t be much of an issue if you live in a big city. However, if you live in a small town, you may have to plan for longer trips as your medical needs become more complex.
Unexpected events
It’s unpleasant to think about how recovering from significant events later in life can be difficult. For example, consider what would happen if you lost your life partner and how your financial picture would change. Or how you would support a relative or your child going through a challenging time. It’s instinctive to want to step in and help, but the reality is that it might be harder to do so in old age.
Serious injuries or health problems could also derail your plans. So could an unexpected natural disaster that results in the loss of your home. Review your insurance policies and ensure you understand what would happen if you suffered an unexpected loss or expense.
Market volatility
Many individuals hold investments when they reach retirement age, which is good. Continue to invest wisely, but also think about what could happen if those investments lose their value.
As you start to near retirement, reassess what level of risk you’re comfortable with. You don’t want to be left with nothing if the market goes south. Many individuals decide to convert their investments into financial vehicles with less risk and a lower reward to protect what they have. Later in life, your focus should be less on accumulating wealth and more about protecting it.
Desired lifestyle
You’ve worked hard for this time to rest; enjoy it! Picture how you would want your retirement years to look and create a financial plan to get there. Then, indulge in the idea of growing old and what you can do with this time.
Where would you like to travel to? Which loved ones do you want to spend your days with? Are there any hobbies you would like to pick up? Where would you like to live? There are no wrong answers. Choose the things you would love to finally do, and then make a financial plan to do them.
Final Thoughts
Although planning for an unwritten future can be difficult, there are guidelines which can lead you to a happy and secure retirement.
If you have any questions, feel free to Join the conversation…