5 Questions to Ask Yourself As You Approach Retirement
Being able to retire comfortably is a dream for many. The thought of leisurely getting ready for the day and making your own schedule to incorporate your hobbies and some much-deserved relaxation is something to look forward to.
Even if you're not close to retirement age, it's still a good idea to start thinking about and planning ahead for your retirement so that you'll be able to live comfortably in your golden years.
Ask yourself the five questions below to help determine if you'll be ready for retirement.
How Much Do I Have Saved Now?
When it comes to saving for retirement, many are unsure as to how much they have saved and if it will be enough. It is estimated that most people will require 60% to 80% of pre-retirement income to maintain their current lifestyle.
So have you logged in to check your employer retirement plan recently? Take a look and you may be surprised as to how much you have stashed away or you could be in for a reality check. Don't forget to take full advantage of your employers' match, as not doing so would be leaving "free" money on the table. If you are behind, remember to take advantage of the over 50 catch-up provisions to supercharge your savings.
What Does My Ideal Retirement Look Like?
We've all thought about how we'd spend our time once retired, but have you thought about it in terms of money? If you're looking to travel, you will most likely need more money than if your ideal lifestyle is spending time with your family. Keep your future plans in mind when you are setting aside money for your retirement.
Will I Need Supplemental Income?
It's important to determine where your income will be coming from during your retirement. Maybe you're one of the lucky individuals who can rely on a pension. Once you turn 59 ½, you'll be able to pull money from your retirement accounts. And when 62 rolls around, you can start taking Social Security.
But based on the projected lifestyle you want to lead, this may not be enough. Think about getting a part-time job at the information desk at the library or at your local performing arts venue. These can be a fun and entertaining way to boost your retirement income. You could also use earnings from your investments if you started investing early in life. Consider speaking with a financial advisor to see if this is the best option for your circumstances.
How Will I Pay for Healthcare?
Though this is not necessarily something fun to plan, planning for healthcare is quite important. If you retire between the ages of 60-65, you will be responsible for providing healthcare for yourself, which can be expensive. Once Medicare kicks in and depending on your health, it can be quite affordable. To ensure you have funds for that pre-Medicare age gap, you can start preparing now by contributing to a Health Savings Account (HSA). An HSA is portable, can grow by earning interest, and be used for qualifying medical expenses. But remember that you'll need an eligible health plan to contribute to an HSA.
Should I Still Consider Retiring During A Pandemic?
With the potential for a recession, it may be difficult to think about retirement, however that doesn't mean retirement is off the table. It will take careful planning, but with the help of an advisor, it can still be achieved.
Depending on your portfolio allocation you may incur a lower percentage decrease in retirement assets than the market in general. Take a look at your investment portfolio, are your investments more conservatively weighted, for example, more in bonds and less stocks? If so, your portfolio may have not taken as much of a hit with the volatile market. A well-versed advisor can help to match clients heading towards retirement with a risk profile that fits their goals and helps to insulate from market risk.
It is important to determine a feasible retirement budget with your financial advisor and understand how your assets will be spent down in a tax-efficient manner. As long as the plan withdrawal strategy is strictly adhered to, you should be able to afford retirement at this time. As with any market downturn, you may need to adjust spending depending on portfolio returns.
It is always best to speak with a financial advisor or retirement planner to determine what will work best for you. Start planning for your retirement now, you'll thank yourself later.
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