One of the biggest lessons of the recent economy is that many people who thought they were financially ready for retirement…weren’t. The amount of money, investments and government support you’ll need to retire comfortably is as individual as you are. Some people plan to work in retirement. Others have health issues or other financial responsibilities to merge with the everyday living expenses they’ll face in retirement.
However, one thing is true for every potential retiree. It makes sense to get advice from qualified financial, tax and estate planning professionals at least one year before a retirement date is set. Here, from the Financial Planning Association, are some preparatory steps to take before you finally set that appointment.
Figure out where the money is: Many potential retirees don’t know where all their retirement resources are. Pull together paperwork related to personal, employer-based and government retirement assets. It’s OK if you don’t know immediately whether you have enough to retire – the experts can help you with that. What’s important right now is to identify everything you have so you can properly evaluate alternatives.
Identify debt: If you have significant home or consumer debt, that’s a tough burden to take into retirement because most retirees find their income will be somewhat or significantly lower. That also goes for big car payments, tuition debt, medical debt or elder support. Debt is the first major reality check on retirement for most people.
Adopt a downsizing budget: Too many people wait until retirement to learn how to live retirees. If you have a budget, review it for unnecessary spending. If you’ve never made a budget, now’s the time. Budgeting for retirement doesn’t mean cutting out every treat and luxury – it simply means extinguishing debt, setting priorities and determining which current expenses can be cut or eliminated. As the real estate market recovers, you may want to plan to sell your current home in favor of a smaller one that can be bought for cash or minimally financed, or possibly you might decide to rent. You might want to try “going smaller” with vacations, cars, clothes and other needs or wants that can move to a lower price point. Do this while you’re working, bank the money you save and you’ll have excellent training wheels for retirement.
Evaluate your support from the government: A good rule of thumb is, “If you need Social Security or Medicare to retire, it’s best to keep working.” While both of these programs remain enormous help to many retirees, there’s always a chance of significant reductions in these programs, not to mention the continued discussion of moving the official “full” retirement age well past 66.
Consider healthcare and long-term care NOW: If you’re lucky, your health is in great shape. If you retire before age 65, you won’t qualify for Medicare unless you are officially disabled. That mea...
When my father retired from the real estate business, he didn’t close his office. He kept it intact for a year, as a contingency plan . He worried that he might be so bored in retirement that he would need to go back to work. That’s not surprising for someone who had to start working at age ten in the depths of the Depression.
We have an expression in this business that goes this: “It’s hard to tell who’s swimming naked until the tide goes out!” The wild gyrations of the stock market in the past few weeks and the big declines in the Dow in the face of economic “good news” has revealed quite a few naked swimmers. It’s not a pretty sight. For the most part, people who have not planned for a period this are feeling the most exposed — and ly feeling the most pain.