Most of us hope to have a long, happy, and prosperous retirement someday. Yet preparing for retirement may actually be a significant undertaking as it really requires us to have many aspects of our lives in order. Although the tendency is to focus on finances, the process of retiring will, to some extent, impact our relationships, our physical and mental health, and even, in some cases, our sense of identity.
Plan For The Future
So, as is the case for so many things, the first step in achieving a happy retirement is to begin thinking and planning ahead. Naturally, financial planning will form a central pillar of this process, but there are other factors to consider as well, like choosing engaging activities that can make the transition proceed more smoothly. This often requires us to adopt a certain mindset—a mindset that doesn’t view retirement as the end of something, but as the start of a new experience.
Nonetheless, getting your finances in order is always critical in retirement. So long before we begin the process of retiring, here are some of the issues that need to be considered:
- Budgeting is absolutely critical. It will really help you during your retirement to evaluate where you are spending every single dollar and what level of income you can expect to receive. This will enable you to deal with any unexpected challenges, which, as we all know, always seem to be lurking around the corner!
- It is important to know the benefits to which you are entitled. There are Social Security calculators online that can assist you with this process. Makes sure you get every cent that’s owed to you.
- Making the most of your 401(k) can be vital, as well. This pension account can be the backbone of your retirement income but make sure you make it work for you. Are you going to leave your money in the company plan or roll it over to your own IRA account? This is a very important decision which could have a significant impact on your financial picture, so consider talking with a financial advisor to aid you in this process.
- Consider the tax consequences of your retirement planning. Learn how your income is likely to be taxed, if at all. Sit down and research different strategies on how to draw down from your investment assets and figure out how these moves may create unwanted tax consequences. Be aware that there can be significant tax penalties related to 401(k) account, in particular.
- Finally, a simple guiding principle in the years leading up to your retirement should be to eliminate most, if not all debt. This process should logically begin with the debts that charge you the highest rate of interest. Paying off your mortgage is a good idea if you have ample liquidity in other investment areas. If you’re low on cash and investable assets, putting this vital money into your house, by paying off your mortgage, can cause problems for you later in life. The bottom line is to try to clean the debt slate as much as you can by the time you enter retirement.
Your Health Is More Valuable Than Your Money
Money makes the world go ‘round, but other areas of your life will be equally important during this period of your life. The one thing more valuable than money is your health. So here are a few simple tips that can make a big difference in this all-important area.
- Pay particular attention to health insurance. Proper insurance can cover you in a worst-case scenario and have a massive impact on your finances as well. Critical medical treatment can greatly improve your quality of life and life expectancy, so make sure you’re well-covered before retiring. And don’t just rely on Medicare; choose the best supplement you can afford.
- An ounce of prevention is worth a pound of cure, so exercise, nutrition, and good relationships are all absolutely central to our general well-being and should not be neglected. What you put into your body is arguably the biggest arbiter of health, so do pay particular attention to your diet. By paying heed to these critical issues, you are also likely to lower your health costs, which may reap financial benefits as well.
- Try to have some money to fall back on for medical emergencies. The likelihood of medical emergencies may increase as our life unfolds, so it pays to be ready for them.
Make Sure Your Expectations Are Realistic
And, finally, retirement should be about having fun and a wonderful life experience. But this is often surprisingly difficult to achieve without setting out clear relationship and lifestyle expectations.
- Retirement can put a strain on personal relationships because suddenly you are spending more time with that person than you had previously. So, as with everything in retirement, this requires some planning and a systematic approach. Talk about your goals regularly. Communicate openly. Be ready to cooperate and compromise. Make time for your partner and try to do some special things together.
- Talk about your dreams and fears for retirement. Everyone has their hopes about how retirement will work out and also anxieties about how it could turn out. By addressing these and meeting them head-on, you maximize the opportunity to create a positive experience.
- Also, take a moment to write down what you want to get from your retirement and refer to this document regularly. Think about the qualities and life experiences that you particularly value and be willing to try new things and take on new experiences in order to achieve them.
By following this simple guidance, you may set yourself up for a much better chance of having an enjoyable and life-sustaining retirement. And after all those years of working and saving…don’t you feel you deserve this?
This article contains the current opinions of the author and are not necessarily those of United Capital Financial Life Management and does not represent a recommendation on of any particular security, strategy, or investment product. Such opinions are subject to change without notice. Information contained herein has been obtained from sources deemed to be reliable but not guaranteed. Certain statements contained within are forward-looking statements including, but not limited to, predictions or indications of future events, trends, plans, or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Past performance does not guarantee future results.