Everyone understands the value of careful financial planning prior to making the move into retirement. But it is equally important to plan for the daily life you will live as a retiree. An effective retirement plan addresses both the financial and the lifestyle side of retiring. These four questions will help you finalize your retirement plans.
How much will you need to live the retirement lifestyle you want? Many of us have a vivid picture of the life we hope to live in retirement. There are things we want to do and places we want to go. Most of us hope to experience and take advantage of our well-deserved status as free-wheeling retirees. A fulfilling retirement should allow us to pay our bills as well as enjoy the pursuit of our passions and dreams.
How much you must save to allow you to do the things you want is based upon the retirement lifestyle you envision. A good plan should include an element of frugality along with plenty of common sense. But we do not want to miss out on things we have always wanted to do now that we finally have time to enjoy ourselves. I find it helpful to think in terms of having paid my dues and earned the freedom to do what I really want. Sometimes I have to do without one thing to subsidize another. And don’t overlook the fact that you could enjoy 20 or 30 years of retired living. Both your time and money need to be budgeted for the long term.
At what age do you hope to retire? Not everyone is able to retire at age 65. Some of us wish to continue working while others may be forced to retire early due to a job loss or health issues. But if you can decide, when would you start your second act? You don’t want to delay retirement so long that you find yourself too old to enjoy the things you planned for. And you don’t want to retire prematurely without sufficient savings to fund your future. The age you decide to retire will significantly impact your financial situation. You will also need to determine when to start receiving Social Security benefits and begin to tap into IRA and 401(k) plans, all of which will factor into your retirement budget. It is a complex decision with lots of moving parts that should not be taken lightly.
If you are married, you also need to factor in your partner’s retirement timing. Chances are slim that you will both retire on the same day. Differences in ages can make it financially beneficial for one of you to keep working. A partner who retires earlier can test the waters to get a better understanding of what retirement truly entails. Their firsthand experience may smooth the transition when the time comes for their spouse to join them.
How will you make each day interesting? If you roll into retirement unprepared to make the most of your free time you could run out of things to keep you engaged. You have to know what you are going to do once you retire. After saving for so long, no one wants to find themselves bored in retirement.
Now that I am retired, I am learning what it takes to keep each day interesting. To occupy myself I need a variety of things to do, including hobbies, passions and new adventures. I have also discovered that if I do not keep myself mentally active I begin to slow down. I need challenges and new situations to keep myself engaged. I try to dedicate a part of each day to physical activity to encourage good health. I have a routine of daily exercise and walking, blogging and writing, online history classes, an iPhone app to learn French, my newly discovered interest in cooking, reading, playing the piano and gardening. My wife entertains a passion for jigsaw puzzles, yoga and Sudoku. And we typically converge at some point in the day for a heated round of backgammon, Scrabble or gin rummy. It is important to keep adding activities, and we are always on the lookout for new avenues to explore.
Will work be part of your retirement? Not everyone is happiest away from work. Some people get a kick out of the job. Co-workers provide a social tie that can be hard to replace. Achieving goals and meeting challenges can keep you feeling alive and important. Unfortunately, not everyone has the option to keep working as companies change direction or hire younger employees eager to be promoted. Retirement can be the chance to try your hand at running your own business, especially if you have always dreamed of taking a shot at becoming an entrepreneur. Even if you are not working full time, some part of your day dedicated to a regular job could make you happier in retirement.
When it comes to planning for your retirement, the important thing is to get started. Don’t wait until you arrive to begin planning how you will spend your time. Deciding what you will do before retirement gives you the opportunity to test things out and make changes so that all you need to do is fine tune during your retirement years.
Written for US World & News