It’s natural to have mixed emotions about retirement — it’s a big life change that people spend most of their working lives preparing for. While the idea of retirement is exciting, the options and advice available can sometimes seem overwhelming and complex. There are several simple things you can do if you don’t feel ready for your retirement years. Check out the steps below to help you prepare for this milestone.
1. Determine your vision. One of the most enjoyable parts of planning for retirement is deciding how you’ll spend your time. While you may just want to relax, you may also decide to move to a different part of the country, travel, volunteer, or spend more time with family and friends. Your plans can always change, but creating a list of activities you might want to do is a valuable and fun part of the planning process.
two. Start with the basics. Developing a written plan is an important first step, but before you get caught up in the numbers, determine what you absolutely will need to cover the truly essential expenses. Include basics like groceries, mortgage payments, health care costs, and other financial obligations. You may want to make a list of areas where you could cut back and reduce your spending if you hit a financial roadblock in the future.
3. Make your concrete plans. Many people obsess over this step as it can come with a hard reality check. To get started, estimate how much money you’ll need to cover your basic needs over the course of a 30-year retirement, and then add in the discretionary expenses that go along with activities and lifestyle goals, like travel and hobbies. Be honest with yourself and try to account for cost-of-living increases and rising health care costs in your projections. This will give you a rough estimate of how much “income” you’ll need in retirement to replace your paycheck and achieve your desired lifestyle. Then consider all the sources you can get this income from, such as a 401(k), annuity, or cash savings. Also consider breaking this amount down into smaller goals that you can more easily prioritize, manage, and track.
4. Protect your plan and your legacy. Make sure the beneficiary information on your accounts is up to date and that you have the right insurance and protection plans to safeguard your income and assets now and for the long term. Also start thinking about the legacy you want to leave: to your family or to organizations that are important to you. Involve your loved ones in these conversations and clearly communicate your intentions and expectations.
5. Track your progress. As with all goals, it’s important to set milestones, check in, and reflect as you go. Keep in mind that a little time and organization goes a long way. Set aside one day each month to sit down with your finances, and also consider meeting with a financial and legal professional annually. Even if your goals still seem far away or you’ve experienced a setback, you won’t regret spending more time reviewing your progress. This also provides a good opportunity to make adjustments if your situation or future plans have changed.
Retirement planning can be a complicated, emotional and overwhelming process. Consider seeking objective advice from a professional financial advisor who can guide you and ensure you are aware of all of your options. It’s important to note that the surest way to feel confident about what’s to come is to do everything you can to prepare for it.
