Ok, let’s admit it. Retirement can be a stressful and time-consuming task. If you aren’t careful, the process of reaching retirement will take all the fun out of retirement itself. In my opinion, starting the process early is a great antidote for retirement stress. By taking small steps along the way, it takes some of the pressure off the final weeks on the job. Here are some steps you can take in advance to help you retire with confidence.
1. Track your spending
It is always important to know where your money is going, but the budget takes on new importance as you consider retirement. Stress often comes from the unknown. Do you know that your retirement income will be enough? A solid, well thought out budget will help you
answer that question with confidence.
2. Pay down debt
High debt levels may be a sign that you aren’t quite ready for retirement. Not only does debt add risk to your financial situation, it muddies the budget and sucks up cash. I love the idea of going into retirement without debt. If that isn’t possible, then have a solid plan to wipe it out and demonstrate to yourself that you can make it happen.
3. Build an emergency fund
An emergency fund is a good idea for everyone, but it takes on added importance for those going through retirement. There can sometimes be delays in starting pension checks and retirement distributions, so the extra cash can help smooth over any bumps. More importantly, an emergency fund will help build confidence.
4. Develop a retirement health care plan
Retiree health care costs are one of the biggest worries for retirees. Most Americans receive their health insurance through their employer, and leaving the job also means leaving the health insurance. As a result, retirees can end up with a significant new cost on the monthly budget. It is important to do your homework and have a plan for health insurance in advance.
5. Develop a Financial Plan
This step may sound self-serving, but I believe in what we do here at Cedarstone. A financial plan begins with articulating clear goals so that you know exactly where you want to go. It involves an inventory of your assets and income so that you know where you stand. And it should project out the future, with steps on how to get there. A plan will answer key questions such as: “Will my money last?” and “Wow should I be invested?” and “How can I save on taxes?”. You don’t have to use an advisor, but it is important to analyze and answer these key questions.
6. Have a goal for retirement
In my experience those who look at retirement as a new adventure rather than a destination end up having a much more meaningful retirement. Instead of thinking about what you are running from (work), I would encourage you to consider what you are running toward. Sometimes the new adventure is obvious, “I’m retiring to spend more time with my grandkids” or “I’m retiring to travel”. Other times the new adventure is less obvious. What is pulling you out of the workforce? What is it that you would love to do with your time if you had more time to give? Surprisingly, I have known more than one retiree that misses the friendships and self-worth that working brings. It is good to consider what your retirement life will bring.
7. Have fun
If you are ready to retire then retirement should be a joyful time! Enjoy!
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