Retirement might seem ways away and years in the distant future. But even so, it’s one of those things in life that requires lots and lots of planning.
Retirement can last anywhere from 20 to 30 years but shockingly, a third of Americans have less than $1,000 saved up. It’s easy to see that the sum won’t be enough, but many people still don’t take the time to bump up their savings. If you don’t want to end up like many Americans and instead want to live comfortably in retirement, then you have to start thinking about, and planning for it, right now.
Here are seven questions you need to ask yourself to get started.
1. When do you want to retire?
The ideal retirement age is different for everyone. You may want to retire as early as possible, while someone else is perfectly content working until the age of 65.
Before determining how much you need to save for retirement, you first have to pick a targeted retirement age. There’s no right or wrong answer and it all really depends on your personal life goals. But remember, the earlier you want to retire, the more you’ll need to save.
A few factors to consider before choosing a specific retirement age include:
- Health – How likely is it that you are healthy enough to continue performing at your job?
- Income – How much can you realistically save?
- Lifestyle – How much do you spend now? What do you want your retirement lifestyle to look like? How much will that cost?
- Career – Are you just clocking in to get a paycheck? Or do you enjoy your work enough that you don’t mind working in some capacity? Are there any opportunities to work part time?
- Family – Do you have kids? How financially stable are your parents?
Take all of these into consideration while making your decision. And before finalizing everything, make sure you add in question #2 below.
2. When does your spouse want to retire?
If you are married, you have to consider your spouse’s situation as well. You two are a team. When does he/she want to retire? They may not have thought about retiring early. On the other hand, they may want to retire even earlier than you because they love to travel.
Or perhaps health problems prevent your spouse from working for as long as he or she can. What’s the plan?
Not only is it a matter of finances between the two of you but it’s also about life goals and aspirations that you share. Ideally, you both will be in sync when it comes to when you want to retire and what you want to do.
3. Will you be eligible for Medicare?
Having proper health insurance is crucial, especially during your retirement years. If you retire at the age of 65, you should be eligible for Medicare. However, if you choose to retire early, you’ll have to consider other health insurance providers.
Another factor to consider is Social Security benefits. Do you or your spouse qualify for those? And if so, how does this affect your overall income?
4. Where do you want to live during your retirement?
You always hear stories about people moving to Florida when they retire, and it’s for good reason. The cost of living in the sunshine state is considerably lower than in most major cities. In addition, it’s sunny and warm year-round.
Think carefully about where you want to live during your retirement years. Many want to be close to their kids and families. But if you’re flexible, your retirement fund may be able to go a lot farther if you move.
This is something even motivational speaker Tony Robbins suggests is a smart idea;
“If there were a way you could save 10 percent to 20 percent, or more, of your current costs and invest them to bring financial freedom a decade closer — and perhaps have an even greater quality of life — wouldn’t you owe it to yourself to push beyond the obvious obstacles and consider your options?”
5. Will you be working part-time?
Not all retirees stay at home to read or play Bingo on weekends. Many choose to work part-time or have a small project on the side to fill up their time.
Is this something you or your spouse are considering? Do you have a hobby you can turn into a part-time job or weekend gig?
This will bring in a small amount of income, which can definitely help during retirement. Perhaps it can even fund weekend getaways or a summer road trip.
6. What do you want to do during your retirement?
Many of us dream about retirement where we finally have the time to do the things we’ve always wanted to do. What does retirement look like for you? Will you travel, invest in fixing up your home, or some other activity?
Whatever it is, try to have a good understanding of what your life goals are during retirement. You not only want to spend that time wisely but you also want to make sure you can fund whatever it is you want to do.
7. How much do you need to save?
And finally, the most important question of them all: how much do you need to save? To get this number, calculate and consider the answers to all the questions above.
Then, factor in how old you currently are, how much you need to save each year, and a realistic return you’ll get if you start saving now. It may be a very rough number but at least it’ll get you started on the path towards financial security.
Your goal of retirement is possible. You’ll need to adjust along the way but every step you take gets you closer to achieving your goal.
Did I miss anything? What’s another question you should ask yourself about retirement? How do you figure out the number you need to make your dream come true?
Originally posted at https://moneyning.com/retirement/thinking-of-retirement-7-questions-you-need-to-ask/