The saying that timing is everything is especially true regarding retirement planning. The Covid-19 pandemic has thrown many people’s retirement plans into disarray. Many people wanted to retire in a few years and may have already mapped out their retirement withdrawal strategy. But now, the pandemic and the resulting economic downturn may force most people to remain in their jobs past when they had in mind.
Typically, there’s a lot to consider when deciding the ideal retirement age, from your finances to assets and the support you’ll need. But there are also other non-financial considerations.
Finances are only one aspect of retirement planning. The emotional consideration about what you want to do next in life is also essential. It’s critical to ensure you are not just financially ready but also emotionally prepared for retirement. To get started on your retirement game plan, it’s essential to ask yourself these seven questions.
1. How Much Do You Have In Your Egg Nest?
Age 65 is often considered the appropriate age to retire. But with the current longevity trend, retiring at 65 may mean you may remain retired for many years.
If you love your job and are still physically and mentally capable, nothing stops you from working past age 65. However, if you can’t stand the thought of going back to your workplace, then maybe you need a new responsibility or challenge to keep you going. The idea is to keep earning money to avoid spending your retirement savings.
2. What Will You Do in Retirement?
Retirement provides you with a whole lot of time, so it’s essential to plan what to do with all that time. Planning what to do in retirement will make it exciting and less tedious. You can volunteer for a cause, engage in consulting, travel around the country or world or spend time with family.
3. Have I Saved Enough Money to Retire?
Everyone wants to know if they have saved enough money to cover their retirement. They want to know if their assets can support an income stream that will fund their retirement lifestyle.
If you don’t already know how much you’ll need to save for retirement, then that’s where to start. You can use your current living expenses as a base for your retirement spending or use a retirement calculator. However you decide to calculate your retirement expenses, it’s essential to make provision for inflation.
4. What Would My Health Care Cost Be in Retirement?
Healthcare is the largest expense for most retirees, yet only a few plan for it. If you plan to retire before 65, it’s important to consider how to cover your healthcare expenses until Medicare kicks in. There are several options, like buying COBRA from your current employees or buying private healthcare insurance. But most of these policies are quite pricey.
Even when you finally have Medicare, you may still have to pay for treatments that aren’t covered by Medicare. This may potentially derail your finances in retirement if not correctly planned.
5. Can I Do Away With My Current Liabilities Before Retirement?
There are several liabilities, such as alimony to ex-spouse and supporting children, that are often affected by retirement. If your kids aren’t all grown up or you’re legally obligated to continue spousal support, you may need to work a few years to support them. But if you still support your adult children, then now would be a good time to stop it, so you don’t run out of money in retirement.
6. Where Will I live?
Would moving to a lower-cost home save you money in retirement? Would moving to a new state lower your tax liabilities? Some states don’t tax income but have higher property sales taxes. Others may not have high taxes but may not have the quality of healthcare or leisure you need.
It’s essential to consider factors like tax and your personal goals in retirement when deciding where to live.
7. Can I Maximize My Social Security
Maximizing your social security involves waiting until the full retirement age to make your claims. Since social security will constitute a huge part of most people’s retirement income, it’s essential to determine if you can wait until age 67 to make your claim. Waiting until age 70 to make your claim can increase your benefits by an additional 8%.
Deciding when to retire can be quite complicated, as there are many financial and emotional decisions involved. Like all good plans, evaluating your options as early as possible may be what you need to attain your retirement goals.