Deciding What You Want Out of Retirement
My father is counting the days.
After about four decades of mostly back-breaking work, he’s set to retire this winter. Just typing that makes me feel old, so I can imagine how my father feels, at least in part.
I know he’s excited for the change, but there’s some trepidation there, too. Thankfully, he’s in solid shape financially and has mapped out his lifestyle plans for when those Golden Years officially start.
That makes him part of a well-prepared minority. A staggering 29% of workers ages 55 and older have saved less than $10,000 for retirement, according to a 2010 survey from the Employee Benefit Research Institute. Overall, the survey suggests that about 4 in 10 Americans have less than $10,000 in retirement savings. (See also: Don't Despair Over Small Retirement Savings)
Today, it’s increasingly important for workers to step back and assess what they really want out of retirement. Here’s a look at five key initial considerations.
Save the Date
Decide when the special day should come. Do you place importance on retiring at a young age, or would you like to stay working for a while? While making this work decision, you will need to reflect on Social Security benefits. Social Security eligibility starts at 62, and monthly payments are impacted by your withdrawal timeline.
You will also have to calculate savings for this projected date. My decidedly non-tech-savvy father started looking at a simple retirement calculator to get a better feel for what awaits. There has to be enough funding stocked up for your retirement adventures. Your goals may need a specific financial plan.
Frugal or Fancy Free
What financial freedoms do you want in retirement? Maybe it's the ability to travel or take the whole family on vacation without obsessing over your budget. Or maybe it's finally leaving those bitter Northeastern winters behind for a November-February home in Florida. It could just be making sure you're able to stay retired and not have to return to the workforce at some later date.
After calculating your projected savings, you may find that living inexpensively now will help you in the long run. Money you save in a company-backed 401(k) or in an IRA will always be there for you in the end. Make your decision and stick with it. Having a concrete, no-excuses budget will allow you to get what you want when you are an official retiree.
Do you wish to stay put, or would you like a change of scenery? According to a 2010 Del Webb retirement survey, retirees are less concerned about the weather at their retirement location; cost of living and health care are the top concerns for deciding on where to nest. Some states and cities meet those needs differently. The housing market should also be on your radar. It may be a buyer's market, but that also means selling your old pre-retirement pad may be more difficult.
With retirement comes aging. Before you retire, make a long-term care plan. This will require you to sit down with your benefactors and discuss future decision-making. If you do not have someone legally appointed to make medical and financial decisions on your behalf, make these arrangements as soon as possible. Your long-term care and living situation should be an ongoing discussion. You may need assisted living some day, or your family may want to take responsibility for your care. Long-term care insurance is a great investment tool to help with these retirement costs.
Get on the Same Page
Make sure your spouse and family know what you expect from this time. Get their input on what they think you will enjoy best in retirement. They may recommend that you buy the motorcycle of your dreams or plan an annual vacation. You and your loved ones probably don’t want your retirement to be full of regrets. Decide what is best now, so you have goals and objectives throughout this new, exciting chapter.