There are lots of ways to plan for retirement, but they all (hopefully) lead to the same place -- happy, financially secure golden years. Here's how to know if you'll be ready.
Are you ready to retire? Some people spend years preparing for their second act, while others roll into retirement and take it one day at a time. Often retirees have some idea of what to expect, but are also prepared to live at a more realistic and enjoyable pace than is typically possible in the working world.
Take a moment to contemplate what may be in store for your retirement and to find out just how prepared you really are. Freedom to do what you want to do is a wonderful thing, but a little preparation and insight into what is ahead can help you to avoid possible pitfalls. Here’s how to tell if you are ready to retire:
Do you have enough saved even in the event of the unexpected? One of the big fears many retirees have is outliving their savings. Take all of the income that will be generated by your savings, investments and retirement plans and compare it to your fixed expenses, assuming you will live into your 90s. Also, remember to budget money for enjoying your retired life and a provision for the unexpected. If you don’t have enough, take steps to correct your funding gap.
Deciding on the best age to begin collecting Social Security benefits is an important part of the retirement planning process. If you start collecting at the earliest possible age of 62, you will receive only 75% of what you would upon reaching full retirement age. But for each year between your full retirement age and age 70 that you delay receiving payments you can increase your benefit by 8%.
Is your relationship ready for retirement? While members of the working world, you and your partner have lived dual lives made up of work and life outside of work. Whatever the proportion of time you dedicated to each other, you have not yet experienced being together 24/7. Once you retire you will be together almost all the time. It can be helpful to communicate ahead of time about this significant change in your lifestyles. Having individual interests and supporting each other in these pursuits can allow for some “me time” to reflect and grow, which will only add to the quality of the relationship when you are together. Don’t expect things to just automatically work out if you have not even considered the real changes retirement life will introduce into your relationship.
Do you have a clear picture of the retirement you want to live? Try to imagine your perfect retirement scenario. Do you prefer a relaxing pace to life, or do you plan to chase after all the experiences you can? Consider whether you are happy with where you are living or might like a new location. Decide if you want to experiment with adventurous trips around the world or are fine with less exotic travel that leans more toward comfort than challenge. And make sure to compare your retirement vision with that of your partner. If you want to be ready to retire, ask the important questions to help better illuminate your path.
Do you have enough to keep you busy? The typical retirement will be a combination of doing things that you enjoy, finding pursuits that are meaningful and doing a bit of nothing as you relax and enjoy the freedom to do as you please. Establishing a balance is important. Retirement does not mean always doing something productive. But it is helpful to think about what will hold your interest and keep you engaged as you live your second act. Do you have enough hobbies and interests to help you avoid boredom? Can you entertain yourself, or do you need company from others?
Do you have the right retirement attitude? Once you have successfully arrived at retirement, the fun begins. But you will also experience the difficulties and frustrations that come with growing older. It is not easy to prepare for something that you have never before experienced. Try to face the challenges of aging with a positive outlook, and find innovative ways to cope with some of the inconveniences of growing older.
