Planning for retirement can be tricky. The question on everyone’s mind is always, “Will I have enough money to retire?” Unfortunately, saving money isn’t the only thing that you need to factor in when planning for retirement. The amount you have saved is just one important detail when you’re deciding how you’re going to live after retiring.
Here are a few things you need to consider when developing a plan for your golden years.
Try New Hobbies
How will you spend your time once you don’t have to go to work every day? Making sure you can spend your time doing what you enjoy can be extremely important to your happiness when you’re retired. Monday through Friday is now yours. How will you spend it?
You could also consider converting your hobby into a side hustle. Wouldn’t it be a great if you could make a little extra cash with your favorite hobby? You could use this money for travel or to make home improvements.
Develop a Retirement Lifestyle
Have you ever taken a moment to sit down and imagine what day-to-day retirement will look like for you and your family? Do you want to travel the world? Do you want to spend your days on the golf course? No matter how you choose to spend your time, make sure you have a plan.
If you have a significant other, make sure you’re on the same page. If they want to travel the world and you want to read a book a day at home, this could cause conflict. Have these conversations in advance and make sure you have the same vision.
Cultivate Strong Relationships
This may seem obvious, but you want people you can share your retirement with. Cultivate relationships with others who share your interests. Making the time for friends now will bring you fulfillment later in life.
Retirement can be lonely and can sometimes lead to depression. Retirees sometimes feel as though they lack purpose once they move on from their careers. A good group of friends to support you can help prevent this. If you feel valued and appreciated, your retirement is likely to yield more enjoyment.
Evaluate Options for Health Care Costs
According to Fidelity investments, a 65-year-old couple due to retire in 2017 would spend an average of $275,000 throughout retirement on health care costs. This could eat up your entire retirement savings if you haven’t properly prepared.
One way you can start preparing for this cost is by looking into long-term-care insurance. This policy isn’t a health care plan, but it can help with personal tasks you accomplish in your everyday life. This could include in-home care, assisted living, nursing home care and more.
Review Your Personal Financial Plan
Your personal financial plan is the blue print for your desired lifestyle and financial goals. It can help navigate you the rough waters of retirement planning.
Life happens and priorities change, which is why it’s important to evaluate your financial plan at least once a year. Take a look at your past year and see what goals you were able to accomplish and which ones fell short. By doing this, you can make adjustments if your goals and objectives have changed.
Hire Someone to Help
Creating your own financial plan can be a challenge, especially if you have no idea where to begin. Hiring a professional to help you develop a plan can give you not only direction but also peace of mind. Your financial professional can help support you when you need to make tough financial decisions.
For example, if you’re considering selling the home you’ve lived in for 20 years, your financial advisor can help you determine if this is a smart financial move for the future. Having someone who can guide you and knows what’s best for your financial future can help put you at ease.
Develop a Tax Strategy
Tax planning is arranging investments and transactions in order to eliminate or postpone paying taxes. Some would consider creating a tax strategy a form of art. Taxes are complicated, and the tax code seems to change constantly.
Tax planning is an extremely important part of putting together your financial plan. Your financial advisor and tax professional are a great resource for helping you create the best tax strategy for now and into retirement. Find a professional you trust who understands your financial situation.
Understand the Regulations Affecting Your Accounts
Another important aspect of your financial plan is understanding the rules and regulations of your retirement accounts. You could pile money into your savings and tax-advantaged accounts only to find out there are restrictions on how and when you can access your money.
For example, if you have a traditional IRA, you can’t access your account until you are 59½. If you choose to take money out prior to this time you’re subject to a 10% penalty and federal and state taxes. After you reach 70½, you must begin taking required minimum distributions.
Once you begin taking money out of your IRA, you’ll need to pay federal and state taxes. This means that if you have $100,000 in your account and are in the 22% tax bracket in retirement, you really only have $78,000.
Your financial planner is a great resource for helping you determine which accounts are best for your retirement plan.
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