Planning for retirement is a complex issue. The first question on everyone’s mind is will I have enough money to retire? The amount of money you have saved is just one important details when you are deciding about how your life in retirement. However, there are other issues you need to consider when you are developing a strategy for your lifestyle in retirement. Here are a few things you need to consider when developing a plan for the next season of your life – Retirement.
Retirement Lifestyle Strategy
Have you ever taken a moment to sit down and visualize what daily activity in retirement will look like for you and your family? Sure most people have this idea of traveling and enjoying life, but what will you do in between your trips? Do you want to travel the world or just visit family? Do you want to spend your days fishing or working on crafts? No matter how you choose to spend your time, make sure you have a plan. If you have a significant other, make sure you are both on the same page. If they want to travel the world and you want to read a book a day at home, this could cause conflict. Have these conversations in advance and make sure you both have the same vision.
Hobbies and Daily Activities
How will you spend your time once you don’t have to go to work every day? Making sure you can spend your time doing what you enjoy can be extremely important to your happiness when you’re retired. Monday through Friday is now yours. How will you spend it? You could also consider converting your hobby into a “side hustle” o part-time job to earn some fun money or keep you mind sharp. You might enjoy the idea of a little extra cash or maybe you just need daily interaction with people. You could use the money for fun activities or to spoil the grandkids. Either way make sure you do something that you enjoy or fulfills a purpose in your life.
Create Strong Relationships
This may seem obvious, but you want people you can share your retirement with. Cultivate relationships with people who share your interests. Making the time for friends now will bring you fulfillment later in life and give you opportunities to find new interests. Retirement can be lonely and can sometimes lead to depression. Retirees sometimes feel as though they lack purpose once they move on from their careers. A strong group of friends and family to support you can help prevent this. If you feel valued and appreciated, your retirement is likely to yield more enjoyment.
Health Care Costs
According to Fidelity investments, a 65-year-old couple due to retire in 2017 would spend an average of $275,000 throughout retirement on health care related costs. This could eat up your entire retirement savings if you have not planned properly. One way you can start preparing for this cost is by looking into long-term-care insurance. This policy is not a health care plan, but it can help with personal tasks you accomplish in your everyday life. This could include in-home care, assisted living, nursing home care and more.
Review Your Personal Financial Plan
Your personal financial plan is the blue print for your desired lifestyle and financial goals. It can help navigate you the rough waters of retirement planning. Life happens and priorities change, which is why it’s important to evaluate your financial plan at least once a year. Take a look at your past year and see what goals you were able to accomplish and which ones fell short. By doing this, you can make adjustments if your goals and objectives have changed.
Hire a Financial Consultant to Help
Creating your own financial plan can be a challenge, especially if you have no idea where to begin. Hiring a professional to help you develop a plan can give you not only direction but also peace of mind. Your financial consultant can help support you when you need to make tough financial decisions. For example, if you’re considering selling the home you’ve lived in for 20 years, your financial advisor can help you determine if this is a smart financial move for the future. Having someone who can guide you and knows what’s best for your financial future can help put you at ease.
Develop a Tax Strategy
Tax planning is arranging investments and transactions in order to eliminate or postpone paying taxes. Some would consider creating a tax strategy a form of art. Taxes are complicated, and the tax code seems to change constantly. Tax planning is an extremely important part of putting together your financial plan. Your financial advisor and tax professional are a great resource for helping you create the best tax strategy for now and into retirement. Find a professional you trust who understands your financial situation. Understand the Regulations Affecting Your Accounts Another important aspect of your financial plan is understanding the rules and regulations of your retirement accounts. You could pile money into your savings and tax-advantaged accounts only to find out there are restrictions on how and when you can access your money. For example, if you have a traditional IRA, you can’t access your account until you are 59½. If you choose to take money out prior to this time you’re subject to a 10% penalty and federal and state taxes. After you reach 70½, you must begin taking required minimum distributions. Once you begin taking money out of your IRA, you’ll need to pay federal and state taxes. This means that if you have $100,000 in your account and are in the 22% tax bracket in retirement, you really only have $78,000. Your financial planner is a great resource for helping you determine which accounts are best for your retirement plan.
If you are looking for a Financial Consultant that can work with you to develop a strong strategy for next year - contact Stephen Westurn (214.240.0701) or Stephen@Westurnconsulting.com for a get acquainted session.
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