4 Essential Retirement Planning Questions

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

Would you be Happy Retiring Abroad?

I often find myself imagining the tempting possibilities of retiring outside of the US. The promise of incredibly affordable accommodations tucked away in friendly neighborhoods near natural wonders galore can cause even the most reticent to think twice. Contemplating a lifestyle change of such magnitude is no trifling matter. After all, leaving behind what you have known all your life and venturing out into the virtual unknown at a time when you are expected to be chilling on the couch takes guts. Retiring abroad is definitely not for everyone. But could it be right for you?

We recently spent a week in San Miguel Allende (SMA) Mexico, one of those magical places frequently touted as the perfect Shangri La for retirees to be. Obviously a week is not enough time to get a true feeling for an area where you may spend the rest of your life. But combined with the research we did and people we talked with, it was a good starting point.

Located in south-central Mexico about four hours north of Mexico City, the town is a combination of artists, ex-pats who have migrated there since the 1950’s, restaurateurs with diverse backgrounds and tasty specialties, and a population of family oriented locals. The vibe is wonderful. On a daily basis most residents gravitate toward the town center, the definitive place to be and be seen. Families come together to go to church and play in the plaza, spending many weekend hours enjoying being together. The whole area is SMALL Picture through windowincredibly neat and clean with shop owners taking pride in maintaining their individual storefronts and sidewalks. Combining so many of the right ingredients San Miguel is understandably an attractive retirement destination.

My wife and I began our search for retirement spots quite a few years ago. We both feel the attraction of the Bay Area had run its course and the traffic and congestion are just going to get worse. As we began looking at possibilities, we created a set of criteria to better rank the various options. There were certain requirements we did not want to do without including walking distance to a downtown and a friendly climate. This list was our guiding light whether considering a move within or outside of the US.

Using our list to rate potential candidates and compare the alternatives, here is how San Miguel stacked up

(1) Weather

Since San Miguel is at 6200 feet altitude, the mornings and nights can be rather brisk. But most days are sunny – a must have for my wife. Temperature ranges are relatively mild with winter lows of 45 degrees and summer highs in the low eighties and any snow will have to be seen in postcards of faraway places. The weather here is a definite keeper.

(2) Walking distance to a local downtown

This requirement is high on our list of must-haves. We hope to stay healthy enough to walk every day and heading to the neighborhood grocery store for supplies is a routine we look forward to. SMA definitely meets this requirement. Our B&B was located on a hill that required about a 10 minute walk to get to the central plaza. Not a problem walking down hill but getting up was a different story. Although we have no problem navigating this today, adding another 10 years could make this less than desirable. Still, we could live closer to the ground level. Once you are in the town you can basically walk in any direction to find stores, restaurants and local attractions. Taxis are floating around but we never took one except to get back to the airport

(3) Cost of living

Prices were reasonable as far as food and meals, a big change from what we are used to at touristy spots like Baja. We did not look too closely at real estate prices but the fact that SMA is generating so much interest in American and Canadian ex pats suggests you will pay a bit more now than in the old days. Still compared to the Bay Area, the prices are quite attractive.

(4) Safety

Of course a few weeks before we took our trip we read about a major drug cartel boss being arrested while dining in downtown SMA. Already slightly paranoid when departing the security of the homeland I was a bit uneasy. However once there we found no reason to fear our surroundings. People were friendly and there were plenty of police watching the streets. Locals stressed the fact that the area was safe and we ended up agreeing. Still it is difficult and perhaps foolish to ignore stories about the corrupt government and the wide spread influence of various cartels – definitely something to consider in a retirement move.

(5) Proximity to friends and family

This is one area where SMA failed us. Our children are scattered around the Bay Area with three of four living within 15 minutes and the fourth a three hour drive down south. Moving to Mexico would prevent quick visits and impromptu get togethers. And if one of us needed help, the best we could do would be talk on the phone. It is reasonable to assume we would make new friends in SMA but the separation from family is a big negative.

(6) Hospitals and healthcare

Fortunately we did not have the need for these services while on our trip. However before making any major decisions we would have to dig into the realities of healthcare in the area. As we get older we want to be near quality medical services and feel confident in the level of treatment we may receive.

(7) Local attractions

SMA has a unique history going back to 1542 when it was an important hub in the silver trade. Local architecture includes Colonial and Spanish influences and impressive SMALL woman by churchstructures are scattered throughout the area. And if you like exploring churches there are about 50 in the vicinity. The combination of local culture along with artists, writers and foreign retirees makes for plenty fun discoveries as you wander the streets.

(8) Public Transportation

Since SMA is relatively compact, we did not need public transportation on our trip. You can always find a taxi and local buses make regular trips to more distant neighborhoods. As long as our knees hold up we should be able to get where we need on foot.

(9) Community

We hope to retire where we know our neighbors and feel a part of the local community. SMA met this requirement. Despite the fact I do not speak the language people we met got their message across typically with a smile on their face. Ex pats make up approximately 15% of the town so you can usually run into someone who understands your wishes. Floating among the many families that filled the town plaza sharing in their happiness just by being there was a wonderful feeling.

After careful consideration we decided San Miguel Allende will remain on our list of favorite places to visit but will not become our new home. There are a lot of pluses but for us some of the negatives were most significant. It is a bit too far away from friends and family but we are already planning our return.

5 Retirement Planning Must-Haves

To help assure a smooth transition into retired life it is important to take a close look at how well prepared you are. If you plan to retire at 65, you can typically expect to enjoy 20 or more years of retirement. No one wants to retire before they are ready, but if your finances are in order and you are anxious to make the move, it’s time to compare where you currently are with where you need to be to take your first steps toward a happy retirement.

For retirees to be, the first consideration is whether you have enough saved and invested to sustain your financial needs throughout your retired life. Not only do you need to have the basics covered, but you also want enough to live the lifestyle you choose and to do the things you have always wanted to. For greater peace of mind you can set aside funds to address unforeseen emergencies and unplanned cash needs which materialize all too frequently. The goal is to find a balance between working additional years to add to savings and getting started on your retirement journey as soon as possible.

Once you have enough money to retire, take a look at how prepared you are for the following:

What will you do? What you do to stay actively engaged will be a key component of the retirement happiness you experience. Before I roll into retirement I plan to compile a list of at least ten different activities and interests to keep me going during my second act. You may be able to get by with less or prefer more, but ten is a good starting point for me. The idea is to have a broad variety of interests to keep not just busy but actively involved and participating in each day. I believe it is important to choose activities that are dynamic and require you to think, calculate and stimulate your mind. Doing the same thing or following an identical daily routine may feel comfortable, but when you can basically run on auto-pilot there is not much challenge. My top five things to do in retirement are learning to speak French, improving my skills on the piano, continuing my blogging and writing efforts, becoming an expert at growing mouth-watering fruits and vegetables and what I call “historical travel,” where my wife and I thoroughly research the history, geography and culture of an area prior to embarking on a travel adventure.

Is your support network in place? As we age we will occasionally need help from those around us. Although many of us are proud of our independence and would prefer not to impose on others, we may need to at some point. When health and safety become a concern, a strong network of friends and family is of great value. We need others we can turn to not just in case of emergencies but also to assist in basic day to day functions. Having friends keep an eye out for our well being and offering the same in return is a good situation for all involved. Easy access to the nearest hospital and emergency care facilities is also an important consideration. An efficient public transportation system can be a blessing should driving become a challenge. As you prepare to retire, there may be specific areas in your support network that you need to beef up.

Will you retire in place or move? Living in the same home and neighborhood that you are already familiar with can be the perfect retirement for some people. Ideally the mortgage is paid off, you are friends with most of your neighbors and you know where all the best restaurants, stores and local attractions can be found. As long as you can safely maintain your independent living, retiring in place may be a high priority on your retirement checklist. For other people, retirement offers the opportunity to cash in on equity that has built over the years and move to some place new. Possible attractions include better weather, new surroundings to explore and new people to meet. A change in location can offer a fresh start and a new environment as you begin living your second act.

What insurance coverage do you need? As you age, one thing you can count on is increased expenditures for health care. More years lived means more things have the potential to go wrong. Health care coverage is a critical component of your retirement security. Don’t forget your teeth and eyes, which will likely need some attention along the way. Some people may want to consider long-term disability insurance to protect against what can be catastrophic expenses as the result of an extended illness. Those with estates may opt to help shield beneficiaries from inheritance taxes by purchasing life insurance in amounts that match expected fees to be incurred. With so many insurance options to consider, making the right choices for your individual situation is an important step in preparing to retire.

Do you have goals in retirement? Setting goals is not for everyone, but some people can benefit from a clear target to focus their efforts and energies. You may want to make preparations to leave behind a legacy for future generations or choose to contribute time and aid to worthy causes. Some people commit to improving their health now that they have time to dedicate to exercise and fitness. Setting a goal and measuring your success against its achievement can help to keep you on track and putting in extra effort to get it done.

From my blog for US News & World.