Whether you are just starting out in the workforce or you are retiring in the next year or two there are some serious questions you should be asking yourself as you prepare for retirement. Many of these questions are life questions not solely reserved for preparing for retirement. You can ask these questions at any stage of your life. In fact, I would suggest that you ask these questions at least once a year.
Many people ask me how much they will needto save for retirement. That is something that I can address with them but I need to ask them several questions before I can help them find the answer that works best for them. Questions like what will you be doing in your retirement? How do you plan on living your life? Who will you be spending time with? What is important to you? From there I will start a conversation about life in general. I will learn about their passions, their health, and the legacy they would like to leave.These questions are just a start. Keep reading to see what other questions you should ask yourself.
Have you really thought about what your retirement will look like? Realistically? Most people haven’t! Will you live where you currently live? Will you move to be closer to grandkids? Will you move to a warmer climate, or a cooler climate? Would you like to downsize or possibly upsize your home? These are all questions that need answers. It is after you have answered these questions that you can start thinking about finances. The purpose of having savings and income in retirement is to help you do what you want or need to do in retirement. That’s why it is so important to ask these questions.
I generally start out a “dream maker” session asking people, “What is important to you?” This question stumps a lot of people but it certainly gets them thinking. Generally speaking, people want more of what is important to them. It is unique to every individual. I also ask what is least fulfilling or least important to them. These are things that they may want to reduce or eliminate from their lives if possible.
The answers I get from these two questions are all over the board. As an example I might hear from one person that they would like to kick back and relax or take time to read some good books. Other people tell me that they would like to stay busy. Some people want to work part time and others want to travel, spend time volunteering, spend time with grandkids, etc. It is all up to you but it is something that you should be thinking about. Your plans will help you to properly understand how to save for your retirement.
Other great questions include, whom will you spend time with? Do you have family or close friends in the area? If so, is it important to stay close to them and be able to see them on a regular basis?Are you active in your church? If so, what will it be like if you move away from your church? Your social circle will be important to your wellbeing in retirement. Look what happened during the pandemic when you couldn’t see your loved ones and friends for a long period of time. These are things you need to think about when you are deciding where you will live and the activities that you enjoy.
One exercise that I recommend on occasion is to map out your first year in retirement. That is, pull out a calendar and fill in the weeks and months with travel plans, obligations, friends, family, community and even professional obligations you might be finishing up in your first year of retirement. What does an average week look like? Do you anticipate exercising regularly, golfing, volunteering, date night, grandkids, etc.? How does it feel when you look at a typical week? Do you have travel plans included in your year? These are all important things to think about. I have had retirees tell me that they are bored and others tell me that they are too busy. The trick is finding a happy balance of the things you want and need to do. A little structure is a good thing but when structure becomes obligation after obligation then that may end up stressing you out. That probably is not what you want in retirement.
Speaking of obligations, what will you be doing for healthcare in retirement? If you plan on retiring before age 65 then you will not be eligible for Medicare. You will have to find another source for healthcare and it will likely be expensive. Even Medicare has a cost to it and if you choose a supplement then you will have additional monthly costs. Whether you retire early or at 65 or later you will need a plan for how you will pay for your healthcare.
One of the most frequent questions that I get is, “When should I take Social Security?” That is a loaded question and the answer always is that it depends. You can start taking Social Security at age 62 but you can wait as late as age 70 before you start taking it. As most people know Social Security increases with age. That is to say that it increases every year that you wait to take Social Security. As an example if you wait until age 66 to take Social Security then you will receive 8% more a month for every month for the rest of your life than if you take it at age 65. Does that mean that you should wait to take Social Security? Not necessarily. People need to look at other sources of income and savings before they make that decision. They also need to review their health, their activities, their family longevity, etc. Do you have a pension, annuities, or savings? All of these variables come into play when deciding when you should take Social Security.
Another area of importance when you retire includes legacy planning. Financially speaking, that is where your assets go when you pass away. This is an area that most people don’t want to talk about. Particularly if they are healthy and expect a pleasant 30 year retirement. The key here is that you definitely want to make sure that you direct your assets. You don’t want the state to decide who gets your house, the remainder of your assets, etc. Additionally you should have a health directive that tells your loved ones your wishes should you have a major health incident. These can be handled by a good trust attorney so that you have peace of mind should something happen. Questions that the attorney will ask you include, whom do you want to have as your trustee should something happen to you? Whom would you like to make healthcare decisions for you should you have a health crisis? If you have children, how would you like your children to receive your assets when you pass? These are things to think about before you see a trust attorney.
One note about setting up a trust. If you set up a trust and you don’t fund it properly through your financial advisor then you have wasted your time and money. Make sure you talk to your financial advisor while you are setting up your trust so that the trust is properly funded.
I hope this has been helpful. I have only touched the tip of the iceberg when it comes to planning for your retirement. Planning for retirement is more than just saving money. Saving money is important but you also need to plan how you will enjoy your retirement your way.
Jeff Brindley is a financial advisor at RWS Financial Group. He contributes his financial column Brindley’s Briefs to GazetaDiellievery month. You can reach him at 833.797.4636 X137 or via email at Jeff.B@RWSGroup.org.
Securities offered through Registered Representatives of Cambridge Investment Research, Inc. a broker-dealer, Member FINRA/SIPC. Jeffrey Brindley, Investment Advisor Representative, Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor. RWS Financial Group is not affiliated with Cambridge Investment Research.