Secure the Life You Want: 7 Questions to Ask Before Retirement
Life can pass quickly when you are occupied with work, family matters, and the never-ending to-do list. Before you know it, your retirement years have arrived sooner than expected. No matter your age, it is essential to take time to reflect on what a fulfilling retired life means to you.
Many people simply say, “I want $1 million or $2 million by retirement.” However, unless you envision your life without work and what that entails, the dollar amount you cite likely has little rationale and meaning behind it.
As you approach retirement, consider asking yourself these seven questions so you can feel confident and empowered to live your most rewarding life in this new chapter.
1. How Would You Like to Spend Your Time?
You may be eagerly anticipating the days ahead when you no longer need to rise at 5 am and rush out the door by 6:30 am to arrive at the office by 8 am. Even without a commute, the thought of life without deadlines, pressure, and alarm clocks can be very appealing. However, after doing this routine for some time, you may have become accustomed to the daily grind.
Consider taking time to envision a week in retirement where you have nothing scheduled at all. How would you like to spend your time? How might you structure your days? The routine of work life can have benefits, so it may help to outline your ideal week in retirement so you can continue waking up with purpose every day after leaving the workforce.
Take a calendar and fill out an ideal week, and ask yourself some of these questions:
- What hobbies or interests would you like to pursue?
- Do you want to travel? If so, where would you like to go?
- Would you like to spend more time with family and friends?
- Are there any volunteer opportunities that interest you?
Of course, nothing is set in stone, but beginning to visualize how your days will look in retirement can be an enlightening exercise.
2. Do You Want to Work Part-Time or Pursue Consulting Opportunities?
Many people decide to continue working on a part-time basis, do some consulting work, or volunteer before fully retiring. You may have grown to truly enjoy your daily work over your prime career years and don’t necessarily want to stop working entirely. Or you may be a business owner who will simply reduce hours. Another potential option is to stay with the company you’ve been with for 30 years in a consulting role, working 5-10 hours per week with a more flexible schedule.
Earning extra income in your early retirement years can cover travel costs, a new car, gifts for family, or other one-time expenses that would otherwise involve dipping into your investment portfolio.
3. What Are Your Current Spending Habits?
With steady income during your working years, especially at your peak earning time, tracking all expenses on a weekly or monthly basis may not have been a top priority. However, if you plan to stop working completely, you may feel more anxious without consistent income from a paycheck every two weeks and a clear understanding of your spending habits.
Examine your recent credit card bills and bank statements to get an idea of average monthly expenses. Also, consider sporadic costs that arise over the year, such as annual subscriptions or semi-annual insurance payments.
Reviewing spending patterns with your partner doesn’t have to be dreadful. Motivate yourselves by planning something enjoyable afterward, like a movie, dinner out, or drinks!
4. How Will Your Spending Patterns Change in Retirement?
These phases are often referred to as the “go-go, slow-go, and no-go years” and can provide some additional insight into potential spending patterns you may experience in retirement.
You may wish to treat your entire family to an annual vacation, where you cover the costs for everyone. Or perhaps you know your brother or sister is likely going to need financial assistance in the future, and you want to plan ahead for that cost.
Be realistic about how many people you can sustainably support in retirement. Any financial gifts will directly impact your savings and change your spending calculations.
5. What Are Your Retirement Location Preferences?
Selecting the optimal retirement location can be a financial decision, a lifestyle choice, or both. For most households, housing is the largest expense. Moving to a more affordable area can stretch your retirement savings further.
Consider factors such as:
- Cost of living
- Climate
- Proximity to family and friends
- Access to healthcare
- Recreational activities
Research potential locations and visit them if possible. Speak with locals and retirees who already live there to get a better sense of whether it would be a good fit for your retirement lifestyle.
6. Have You Considered Long-Term Care?
Long-term care is an important consideration for many retirees. As you age, the likelihood of needing assistance with daily activities increases. Planning for long-term care can help protect your retirement savings and ensure you receive the care you need.
Research different options for long-term care insurance or consider setting aside funds specifically for this purpose. Discuss your plans with your family and loved ones so they are aware of your wishes.
7. Are You Prepared for the Unexpected?
Life is unpredictable, and retirement is no exception. It is important to have a plan in place for unexpected events, such as medical emergencies or changes in financial circumstances.
Consider:
- Having an emergency fund to cover unexpected expenses
- Reviewing your insurance coverage
- Creating or updating your will and estate plan
- Discussing your plans with your loved ones
Being prepared for the unexpected can provide peace of mind and ensure that you are ready to handle any challenges that may arise during your retirement years.
Retirement is a significant milestone in life, and it is important to approach it with careful consideration and planning. By asking yourself these seven questions, you can gain a clearer understanding of what you want your retirement to look like and take the necessary steps to secure the life you want.
