3 Things to do Before You Retire!
Retirement is tricky! It involves a number of life-altering decisions that you only make once in your lifetime. Most of these decisions will have a major impact on your life from your retirement date forward. Despite the impact of these choices we do a very poor job of educating folks on what they need to do to prepare for retirement. Sure we all know that you have to put away money, you need to make your money last, and you need to "prepare for the unexpected" but how do you actually do that? In today's video we talk about 3 things that you need to do BEFORE you retire. Certainly there are a number of things to cover, and this short video is merely a starting point, but as a starting point it covers a few things you need to review before you take the retirement plunge!
Retirement Planning Involves PLANNING!
It sounds simple, but retirement planning should involve PLANNING! That means you have some work to do before you pull the trigger on your retirement. We've all had days where you feel like you'd like to walk out of work and never return. That's a bad retirement plan! Do the work in advance so that when that last day comes you know you're prepared!
Step Number 1: Pay Off Your Debts
Do your best to pay off your debts before you get to retirement. Retiring is much easier if you are doing it debt free rather than carrying a bunch of payments into retirement with you. One thing that goes missing in retirement is your ability to make more money to replace what you have spent. Because you enter retirement with a finite amount of resources, spending those resources paying off debts can be a real drain. If you want to retire and you still have substantial monthly expenses due to a mortgage, multiple car payments, a boat payment, etc. it might be time to consider downsizing the house or to get on a repayment plan that will allow you to pay off those bills before you get to retire.
Step Number 2: Get a Handle on Income and Expenses
When you retire both your income and your expenses will change. Obviously your income source will change because you will no longer have a paycheck, but your expenses will change as well. You will no longer be paying certain taxes. You will no longer be contributing to your retirement accounts out of each paycheck. You will likely have lower day to day expenses from things like commuting costs, meals out, clothes for work, etc. By the same token you may have some new expenses like your Medicare costs. You also need to be mindful of a proper budget for entertainment - when every day is a weekend it can be easy to spend more than you are used to spending on having fun! Do your best to plan for these changes in advance and make sure that you have a solid budget heading into retirement. And make sure you leave yourself a little wiggle room, no one can properly budget to the penny, and not leaving a little slack in the budget can lead to unnecessary stress by going into retirement by having an unrealistic plan.
Step Number 3: Model Your Scenarios
Taking into account everything you can plan for - create a best case scenario, a worst case scenario, and a likely scenario. Try to look at all of the variables that may come into play in your retirement and assess what sort of impact they could have on you. A good advisor should be able to help by working with you to create a plan, as well as to identify the risks and pitfalls that may impact that retirement.
Get In Touch:
As always - if you are in need of some help creating your plan, or if you are looking for a second opinion to review the plan you currently have get in touch. We love to chat about this stuff! Feel free to reach out on any of the following: