Retirement means different things to different people. To some, it means moving from a full-time career to part-time, meaningful work. For others, it means time to focus on an avocation, like music or writing. For others, retirement is finally having time for gardening, travel, or the golf course.
Before you can prepare, mentally and monetarily, for retirement, you need to know what retirement means to you. Retirement readiness means deciding when you want to retire, where you want to live, and what kind of lifestyle you want. And, of course, how to afford it all.
You’ll need to make these decisions long before you retire.
Retirement Readiness: Mental Preparation
What’s to prepare? Many of us imagine that deciding what to do in retirement is a no-brainer. No more alarm clock! Sleeping late, puttering around the house, playing golf. Binge-watching TV series or movies.
What Will You Do in Retirement?
Doing whatever you feel like sounds like a great idea, but it can get old fast. You may even miss the routine of a job, especially if you are a high-energy, high-responsibility professional.
Some things to think about as you mentally prepare for retirement:
- What new interests would you like to explore?
- Is there something you’ve always wanted to try?
- How about taking up a hobby or spending more time on one you already have?
- Do you want to visit exotic places?
- Are you able to make new friends and have more time for the old ones?
How Will Retirement Affect Your Marriage?
How will you and your spouse adjust to being together 24/7? A happy retirement means co-existing differently than you’re used to. You’ll have to find ways to balance being together and having time apart.
Talk about retirement with your spouse and make plans that respect each other’s interests and need for time alone.
Making the Most of Your Retirement
A Merrill Lynch/Age Wave study on health and retirement found that 67% of those surveyed noted that continued mental stimulation and challenge will continue to motivate them in retirement.
When you retire you’ll have a lifetime’s worth of experience and talent to share. Working with organizations and causes that you believe in can give you a double benefit: a new community of friends and a renewed sense of purpose.
Consider using your time, talent, and experience to volunteer or develop a home business that makes the most of your expertise..
Retirement Readiness: Financial Preparation
In the best of all possible worlds, you’ll decide when and how you retire. To have the most possible control over your retirement, plan now.
- Set up a plan for your income during retirement. Experts recommend 70-80% of your pre-retirement income.
- Pay off your debts before you retire if possible.
- Make a budget.
- Figure out how much savings will meet your income post-retirement needs.
- Review your will and powers of attorney.
- Begin to downsize.
- Decide if, or how much, you want to work after retirement.
- Decide when to collect Social Security (later is better).
- Consider your insurance needs after retirement.
- Build up your emergency savings account.
Being Forced into Retirement
Shakespeare said, “Some are born great, some achieve greatness, and some have greatness thrust upon them.”
The same can be said about retirement. In the best case scenario, you’ll choose when to retire and the conditions of your retirement lifestyle.
But what if you’re forced into retirement? Say your company downsizes you at age 55. It’s tough to find another job at that age, much less a job with the same pay. What are your options?
- Take a job at lower pay
- Part-time work or consulting
- Cut your expenses, downsize, live simpler
- Use benefits like unemployment and Affordable Care Act exchanges
- Investigate a reverse mortgage
- Set up a home-based business for passive income
Preparing for Retirement Begins Now
It’s never too early to prepare for retirement—mentally and monetarily. The best-laid plans don’t always materialize, but that doesn’t mean you shouldn’t have a plan. That way, whatever the circumstances, you’re mentally ready for retirement and you’ll be set up to enjoy it. When you’re financially prepared, you’ll be able to achieve it. Start your preparation now.