Often when we listen or join in to the conversation about retirement, the primary concern has to do with financial preparation. Yes, being financially ready to retire is a big check box on the to-do list of “Retirement Readiness,” but it’s not the only one.
Financial readiness is only one part of being ready for retirement. Being mentally, emotionally and physically prepared are also important factors in your preparation for retirement. So let’s take a look at what it really means to be “ready.”
Consider your Emotions. Are you happy about your retirement? Studies have found that no matter what age people retire, they all go through the same psychological stages of adjustment. First, there is an initial spike in well-being, which is followed by a rapid fall in happiness levels within a few years. After which, happiness levels will stabilize. So do what feels right for you, there is no rush, retire on your own time schedule.
Consider your Lifestyle. When you retire, will you keep working? As of May 2016 studies have shown that 18.8% of Americans over the age of 65 are still working full or part time jobs. This means nearly 9 million people are still working, will you be one of them? If not, what will you do? Travel? Volunteer? Or find new hobbies to keep yourself occupied? If you don’t know what you’re going to do with all of your time, you may not know how to adequately plan your finances?
Consider your Health. If you receive health insurance through your job, you need to find another form of coverage before you retire. If you plan on retiring at the age of 65, you’ll qualify for Medicare. If you want to retire sooner, you need to find alternative coverage. Make sure that you budget for it, because health care on your own can be very expensive. A 60-year-old couple can expect to pay over $15,000 per year for a gold-level health insurance plan. And that doesn’t even take into consideration the rising costs of long-term senior healthcare.
Consider your Income. This is the main concern for many when considering retirement. How much will you receive from Social Security? Do you have a pension or 401k? How much have you saved? According to the Social Security Administration, the average 65-year-old man will live until he’s 84 and the average 65-year-old woman will live till she’s 87. It’s recommended to accumulate enough savings to cover 20 to 25 years of expenses for your retirement. A common benchmark for your annual income is 80%, so if you earned $50,000 a year the 80% replacement rate for your retirement years would be $40,000. To determine your replacement rate, you’ll need to ask; once you’re retired how much less can you live with than you had previously?
For more information or a free consultation, contact a Smart Money Retirement Specialist that that will take the time to understand your personal retirement goals, and help you to find solutions that work for you and your family. Gary Ybarra can be reached at firstname.lastname@example.org or 888-406-8658