BA50 TalkersAre you ready to take a load off and stop working forever? Without proper planning, the days after the end of a career can be fraught with insecurity and gloom. Plan properly, and your retirement years can be fruitful, frolicsome and full of joy. In the interest of promoting financial happiness, we are pleased to present the following tips to help you know if and when you are ready to call it a day and ease into retirement.
Periodic financial progress checks
Do you sometimes worry that you’ll never be quite ready to retire? If you do, you’re certainly not the only one. According to Forbes magazine, a mere 22 percent of employees say that they’re on the fast track to retirement, and that number may be lower than the actual fact. Truth be told, there are a lot of things to consider before collecting your gold watch and riding off into the sunset. Finding a way to replace at least 80 percent of your work income is only one of them.
The time to begin monitoring your financial life is now, if you want a happy retirement later. It’s important to look into the future and determine things like where you will live, how much you will spend on food and sundries, and how you will get around. Will your current debt load be paid off by the time you step away from the world of day-to-day employment?
Financial experts at Money magazine suggest you ask yourself a few questions as you near possible retirement age. First, will you be able to fill your days with meaningful activity, once you’re no longer commuting to an office? Persons with a passion outside the workplace tend to have a happier, healthier retirement than people who simply stop going to work.
If freedom is worth more to you than money, you may be a good candidate for retirement. If you can come up with around 80 percent of your current income, you may be able to retire from the workforce and move into your so-called “golden years” with confidence.
Health issues plague many older Americans, so be sure you have adequate health insurance and know how to use it. If your job places you under a lot of stress, you may find that retirement actually makes you feel better.
Three pre-retirement phases to know about
According to Forbes magazine, there are three long steps people take along the path to a happy, healthy retirement. A decade or so before retiring, most persons start to examine their personal debt and set a long-term goal to pay it down. While they may have considerable debt, most people also have a full income at this phase of their working career. They are also generally in good health and don’t take a lot of sick days at work.
During the second pre-retirement phase, which generally runs two to nine years before retirement, people tend to pay off their mortgage and other large outstanding debts. At this phase, most nests become empty as kids grow up and move out. Of course, if those kids are moving to attend college and their parents are footing the bills, this phase may last a bit longer than expected, according to Certified Financial Planners.
The third phase of pre-retirement involves fine-tuning finances so they last for the duration of a person’s lifetime. These days, the average 65-year old can expect to live to at least age 85 or 87, depending on things like family genetics and lifestyle.
Don’t make these retirement mistakes
Again, we turn to Forbes for financial advice. Their experts warn those in pre-retirement to not conflate investment returns with actual income. Sure, you might draw five percent interest on your investment products, but this does not mean that you can count on that the same way you can count on a paycheck today.
Don’t overestimate your investment returns. You may be earning up to ten percent on your stock portfolio, but you would be smart to assume your post-retirement stock returns may be a lot less. Why? Poor mutual fund performance and below-average bond rates may reduce your future income. Stay ahead of the game by looking at stock returns as a nice “bonus” that you can enjoy now and then while not counting on it for day-to-day living expenses.
In order to fully understand your future financial requirements, your best bet is probably to consult with a qualified accountant or other financial professional.
Jude Haynes is a personal finance consultant who works heavily with those nearing retirement to make sure they are making use of their assets in the best way possible. She writes on the topic of retirement for over 50’s blogs, personal finance blogs as well as other places around the web who will have her!