It’s never too soon to think about retirement, because no matter how much technology improves, medical science advances, and society fluxes, there are some things that never change: you’ll always need a place to live and food to eat. And that’s the bare minimum – to have any quality of life, you’ll want things to do, people to talk to, and good health for as long as possible; all are things you must consider and budget for as you approach retirement.
Your biggest responsibility to your retirement-age self is to plan responsibly. Whether you earned a retirement plan or pension from a job, receive social security, or have a nest egg, you’ll need to predict how much you need to retire, then calculate for possible emergencies, illnesses, and the off chance that you live well into your 100s.
Here are 5 things to consider when planning your retirement:
As you contemplate where you’d like to live, remember to look at the pros AND the cons. Some people dislike renting because you’re spending money every month but not building equity; however, you’re also not responsible for the large things that can go wrong – you won’t have to replace the roof after a storm, for example.
Owning a home includes property taxes, insurance, perhaps a mortgage, and upkeep – but you’ll be building equity in something you could pass down to your children. Retirement communities can be expensive, but most include on-site nurses and other elder care options; some even include meals. And, if you plan to live with a relative, include them in your retirement plan, as events and decisions in their life will significantly affect your life as well.
Costs of Living
In addition to considering renting versus owning, don’t forget the necessary utilities – gas, electric, water, trash pickup, etc. – along with the “unnecessary” amenities, such as cable TV, the internet, and someone to mow your lawn.
You’ll also need clothes, groceries, gas money, medication, etc. Don’t underestimate monthly costs when doing calculations beforehand – and don’t forget about inflation. As time passes, prices will rise; if you live another 30 years, food costs will be noticeably higher at the end of your retirement than at the beginning.
Healthcare and Insurance
Until we invent machines to put our brains in, our bodies will continue to deteriorate as we age. It’s harder to bounce back from an illness, for example, bruises heal a little more slowly, diseases like Alzheimer’s, arthritis, cataracts, etc. become more likely, your reflexes aren’t as fast, and, unfortunately, more. You can prevent some of these by consciously taking care of yourself – such as with exercise, vitamins, and mental stimulation – but you’ll still need health insurance to cover you in the event of a worst case scenario. Medical costs are high and good insurance can keep untimely illnesses from gouging your retirement fund.
A Second Career?
Some people retire and find themselves bored – once they catch up on their reading and sleeping late, they want something more active and engaging to do. Some colleges allow “non-traditional” students ages 65+ to take classes for free; you could get a degree and start another career. Not only would this additional money be helpful throughout your retirement years, it would “keep you young” with the mental and social stimulation you need to stay healthy.
And, although it’s not a second career, you could also volunteer.
Writing Your Will
In reality, because a freak accident and untimely death can happen to anyone, everyone should have an official, overseen-by-a-lawyer will. Before you begin this task, consider how you want your estate divided – do you want your children to sell your house and split the proceeds? Will you give one of your children your home and the others a monetary inheritance? There are many ways to handle your money and possessions after your death. Also, how do you want your remains dealt with? Do you want to be buried or cremated? Do you want to donate your viable organs or perhaps your body to a medical school? As with your estate, there are many options for your remains.
As you can see, there are many things to think about NOW, even before you retire! Start planning early by calculating living costs and healthcare needs – but also try to leave room for late-life decisions like an experimental new career or a sudden urge to see the Great Pyramids.
For advice and assistance planning for your retirement, please contact us today – our financial planning experts are ready to help.