My Retirement Plan Ends
Believe it or not, retirement can be difficult. I know of several people who have failed at retirement. One friend failed it twice. Let’s face it: when you are accustom to going to work daily and then have nothing that you have to do, it can be a bit daunting for some people. We have all read stories in the newspaper of people who have died within days of retiring. Sadly, many older people fail to make even the basic mental or financial preparations.
Studies have shown that only about 60% of workers age 55 and older have thought about how they’ll occupy their time in retirement, and less than half have estimated their retirement expenses. So, I recommend that EVERYONE follow the following eight steps, which will be presented over the next three or four posts.
1Envision your next chapter; Picture your day to day life in retirement. Perhaps you will work part time or perform some volunteer work or spend time with family or friend. I have a friend whose wife would probably have a conniption if my friend was home with her all day. Remember that you could be retired for the next 20-30 years, so you don’t want to be bored.
I recommend finding a retired friend who seems engaged and fulfilled. Take that person out to lunch to talk about retirement, and check out online resources such as “Encore.org.“
2Size up your potential income and expenses: When you know how you will spend your time in retirement, you’ll have a much better idea of how you will spend your money– and more importantly- whether you will generate enough income to pay your bills and/or have sufficient assets to cover your proposed lifestyle for the rest of your life.
Thus, I recommend that you create a budget and divide your expenses into two categories: discretionary and non-discretionary expenses.
NOTE: You need to be very realistic about these expenses including health care, travel, housing etc. Don’t forget that Medicare can have some significant surcharges based on your income. One key point is to aim to have enough guaranteed income to pay for must have expenses such as food, shelter and health care. Thus, if you can cover your essential expenses, you won’ t worry about a prolonged market downturn.
Also, you want to maximize your Social Security. This is a big element in retirement income that you want covered. Generally, if possible, you want to wait until you are age 70 since each year that you wait past age 66, you get an extra 8% per year more for the rest of your life. Also, check out web sites with good information such as maximizemysocialsecurity.com.
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