Life can fly by when you’re busy with work, family, and a never-ending to-do list. Before I knew it, the year of retirement had arrived earlier than I expected. No matter your age, you should take some time to think about what a fulfilling retirement life means to you.
Many people simply say, “I want $1 million or $2 million by the time I retire.” But unless you imagine your life without a job and what that entails, the amounts you quote seem to have little basis or meaning.
As you approach retirement, consider asking yourself these seven questions to help you feel confident and live your most rewarding life in this new chapter.
1. What does your ideal post-retirement week look like?
- what time do you get up?
- How often do you exercise? When is the best time of day for you?
- What activities do you do throughout the week?
- Who do you want to spend time with?
- How often do you cook compared to going out to eat?
- Years of service: If you are still working, these are your current monthly expenses until retirement.
- year of early retirement: Typically, during the first five to 10 years of retirement, you may travel more, eat out more, and do more of the things you’ve always wanted to do in your free time.
- subsequent year of retirement: Think after the age of 75-80. You may not be traveling as much or traveling as far as you were when you retired early. Things will start to slow down and you may end up doing less of the more costly activities. Health problems may develop that limit your ability to do certain things you used to enjoy.
- stay in place: My mortgage is paid off, my family is nearby, I like my house, and there’s no reason to move, so why move?
- move closer to family: Maybe your kids and grandkids are in Pittsburgh and you’re in San Francisco. You’ve been waiting for the day when you can finally retire and move closer to your family.
- Move to a state with no income tax: Maybe you’re tired of your current state’s high taxes and are looking forward to the time when you can move to a state with no income tax, like Florida, Texas, or Wyoming.
- Sales and rental: You may have the freedom to choose where you want to live after retirement, but you haven’t decided on the ideal location yet. You’ve decided to sell your home and rent in different cities over the next year or two until you settle on the place that will give you the most fulfilling retirement experience.
- Downsizing: You and your life partner realize that a five-bedroom, three-bathroom, three-story home is not what the two of you need for the next few decades of your retirement. Moving to a smaller home that doesn’t even require a mortgage (because you have equity in your current home) could make your retirement more fulfilling.
- hobby: I finally have time to pursue more of the activities I’ve always enjoyed, such as tennis, cooking, writing, reading, and painting. You may also decide to start a new activity. Who doesn’t want to play pickleball these days?
- community: Be active in your community by joining a club, volunteer organization, or community group that aligns with your interests.
- lifelong learning: Have you always wanted to learn a new language? Have you always wanted to read a new book every month but just couldn’t find the time? Take classes at your local university or library, or join a local book club. If you participate, you may meet new people and make new friends.
- become a regular: I frequent certain coffee shops, restaurants, gyms, or barbershops on a regular basis. That way you can get to know the people there. Establishing connections with familiar faces, even if the interactions are brief, can foster a strong sense of community.
- Do you have enough savings? The answer to this question is not easy. It’s not about setting a specific amount. The calculation of “enough” involves the intersection of many assumptions, including your expected expenses, sources of income such as Social Security, how long you will live, and what will happen to the economy.
- Do you have enough savings for the worst? Let us tell you one thing we know about your future. That means things don’t go as planned. So if you want a secure future, plan for the worst-case scenario and be prepared for inflation to spike or the market to crash right before you want to fund your child’s college costs. It is also a good idea to check that it is ok. NewRetirement Planner allows you to build different scenarios to put pressure on your future financial security under different conditions.
- Can you afford medical expenses? : How do you get health insurance if you quit your job before age 65 (before you’re eligible for Medicare)? Or, if you’re eligible for Medicare, which Medicare health plan is right for you? Most reasonable?
- And what about long-term care??: It’s not a fun topic, but what do you do if you start experiencing cognitive decline or another serious health event? Do you have a plan to address those issues? How do I pay for professional care?
- investment strategy: Do you need to adjust your investment portfolio to your current life stage?
- estate planning: Do you have a will, power of attorney, or living will in place? Do you need a living trust? When was the last time you updated your estate plan?
You might be looking forward to the day when you won’t have to wake up at 5 a.m. and rush out the door by 6:30 a.m. to get to the office by 8 a.m. Even without a commute, the thought of a life without deadlines, pressure, and alarm clocks can be very appealing. However, after following this routine for a while, you may have gotten used to the difficulty of each day.
Take some time and imagine your first week of retirement with no plans. How do you want to spend your time? How do you structure your day? There are benefits to having a routine in your work life, so having an outline of your ideal post-retirement week can help you stay purposeful each day after you leave work. You will be able to stay awake.
Mark your ideal week on your calendar and ask yourself the following questions:
Of course, nothing is set in stone, but starting to imagine how you’ll spend your days in retirement can be an enlightening exercise.
2. Do you really want to work?
Many people decide to continue working part-time, do consulting work, or do some volunteer work before retiring completely.
You may be at the peak of your career and really enjoy your day job, but you don’t necessarily want to quit your job completely. Or maybe you’re a business owner who simply wants to shorten your business hours. Another potential option is to continue in a consulting role with the company he has worked for for 30 years, with a more flexible schedule where he would work 5 to 10 hours a week.
Earning extra income after early retirement can cover travel expenses, a new car, gifts for family, and other one-time expenses that you would otherwise need to put into your investment portfolio.
Visualizing how part-time work impacts your financial retirement planning is one of the many variables you can model in NewRetirement Planner.
3. Do you have a clear understanding of your daily living expenses?
If you had a steady income during your working years, especially during peak earnings, tracking all your expenses on a weekly or monthly basis may not have been your top priority. However, if you plan to quit your job completely, you may feel even more anxious without the steady income of a biweekly paycheck and a clear understanding of your spending habits.
Look at your recent credit card bills and bank statements to understand your average monthly expenses. Also, consider sporadic costs that occur throughout the year, such as annual subscription fees and semi-annual insurance payments.
Reviewing your spending patterns with your partner doesn’t have to be scary. Plan something fun to do afterwards, like a movie, a meal out, or a drink to keep you motivated.
Also, you don’t have to do it alone! NewRetirement Planner allows you to model your spending through Basic Budgeter and Detailed Budgeter as a PlannerPlus subscriber. You can model how your spending will change in the future while reflecting your current spending by adding spending from different stages of your life, such as:
These stages are often referred to as “Go-Go, Slow-Go, No-Go Years” and can provide additional insight into the potential spending patterns you may experience in retirement.
Check out more tips on how to plan for your retirement expenses.
Four. Can I give gifts or provide financial support to my family?
When predicting your retirement expenses, you probably focused on your recurring monthly fixed and variable expenses. However, have you also considered the possibility of future support for your children, grandchildren, siblings, and others?
You might want to invite the whole family on an annual holiday, at everyone’s expense. Or maybe your brother or sister is likely to need financial help in the future and you want to plan ahead for that cost.
Be realistic about how many people you can sustainably support in retirement. Financial gifts directly impact savings and change spending calculations.
Note: Planner allows you to model future one-time expenses, such as gifts to family members, and see if they are feasible as part of your overall retirement plan.
Five. where do you want to live?
Choosing the best retirement location depends on financial decisions, lifestyle choices, or both. For most households, a home is the largest expense and asset. As a result, where you live can have a significant impact on your financial security and satisfaction in retirement.
Possible considerations include:
6. How do you envision your social life?
Work colleagues can evolve into an extended “work family” over time. Have you ever thought about how to foster social connections in retirement?
Harvard University Adult Development Researchone of the longest-running studies of adulthood, found that strong social connections are associated with longer, happier lives.
Social activities to consider include:
Staying engaged, pursuing your passions, and staying involved will help you live a fulfilling and enjoyable retirement.
7. Have You Created a comprehensive retirement plan?
In addition to considering your retirement goals, it’s always important to address the financial aspects of retirement. This may include:
Many financial aspects of retirement can be effectively managed using NewRetirement Planner. This tool allows you to plan for future medical and long-term care expenses and evaluate investment returns over different time periods, so you can optimize your financial preparedness for retirement.
By thinking comprehensively about how you will allocate both your financial resources and your time during retirement, you will be better prepared to realize your lifelong dreams in retirement.
