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 thought of retirement is exciting, the options and advice available to you can sometimes seem overwhelming and complex. There are several simple things you can do if you don’t feel ready for your retirement years. Please see the following steps to help you prepare for this milestone.
one. Determine your vision. One of the most enjoyable parts of planning for retirement is deciding how you will 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 things you might want to do is a valuable and fun part of the planning process.
2. Start with the basics. Developing a written plan is the first important step, but before you get caught up in the numbers, determine what you will absolutely need to cover the truly essential expenses. Include basic items 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 expenses if you hit a financial hurdle in the future.
3. Make your plans concrete. Many people obsess over this step as it can come with a harsh reality check. To get started, calculate 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 accompany activities and lifestyle goals, like travel and hobbies. Be honest with yourself and try to factor increases in the cost of living and rising health care costs into 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), annuities, 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 in 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 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 legal and financial professional annually. Even if your goals still seem far away or you’ve experienced a setback, you won’t regret taking the extra time to review your progress. This also provides a good opportunity to make adjustments if your situation or plans for the future 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 make sure you are aware of all 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.