The key to retirement is preparation. However, in order to be fully prepared, you have to know about the process—inside and out. In fact, you shouldn’t let yourself rest until you understand—and rise up to face the challenge—regarding these questions to answer before you retire. So, don’t sit around and hope that your retirement will go off without a hitch. If you don’t know what you’re doing, the reinvention phase of your life could be replaced by an indefinite stay in the workforce.
What expenses will you deal with?
Retirement is not cheap! Even worse, there are many hidden expenses that are easy to overlook. If you’re saving for your reinvention years, you need to make sure that you’re covering all potential issues. So, what will you be paying for in retirement? Here are a few of the biggest—and most important—expenses:
- Rent, housing, utilities, or other costs of living;
- Emergencies, such as totaled cars, flooded houses, or ruined kitchen appliances;
- Medical care, both expected and unexpected;
- Food, clothing, gas, and other items meant for personal use; and
- Recreational activities and traveling.
Some of these questions to answer before you retire may be more important than others. Still, you should calculate about how much you expect to spend on each of these. Round up, and account for inflation! And remember, you may encounter something you didn’t anticipate, making a sizeable retirement fund less of a luxury and more of a necessity.
For how long do you plan to retire?
Once you get a handle on what your expenses will be, the math can only get you so far. Why? You’re missing an important variable: how long you plan to retire. This length can determine how long your savings last and how much you need. Don’t dismiss its importance.
Additionally, it’s wise to keep in mind the fact that traditional retirement isn’t the only option. Many people work part-time, sell crafts or wares, or freelance. If you decide to go with a less well-known route to retirement, this could help immensely. After all, you’ll have a continual—if small—stream of income. Besides, many people get restless part way into their retirements. For those who prefer to be more active, working can help bring a sense of calm and fulfillment to their reinvention years.
What will fund your retirement?
Bigger is better. Your retirement fund can’t afford to fall too far behind. Well, how do you make sure that it doesn’t? You need to draw from multiple streams of income. In this case, it should be your investments, your Roth or traditional IRA, and Social Security. Here are a few rules of thumb to guide you:
- Investing wisely depends on a simple calculation: the older you get, the safer your investments ought to become. That way, you don’t lose everything right before retirement.
- Roth IRAs are the best for tax advantages, while traditional IRAs are best for a longer period of time to build your money.
- The longer you can wait to draw on your Social Security, the better situation you will be in as you receive your benefits. If you can, try to start tapping into your Social Security at your full retirement age (FRA)—or even later.
Knowing where your retirement money is coming from will help you figure out—and plan for—your future. It’s also important to make sure that you fund your retirement in a sustainable way, allowing prosperity in your golden years.
By mapping out your resources and responses to these questions to answer before you retire, you can take charge of your retirement. A bit of planning—and a bit of work—are all you need to make your well-earned retirement a breeze. Now, it’s time to answer these questions for yourself!
Another question to answer before you retire? Who you’re investing with! At Ty J. Young Inc. at 877-912-1919, our experts will help you grow your nest egg while keeping it protected from market losses. To find out more about the retirement process, give our blog a read.