Retirement. Warm weather. Doing what you want to do when you want to do it. Not a worry in the world. Isn’t that what we all envision? Making the decision to retire is exciting… but it can also be a challenge.
There is a lot of thought and planning that goes into making this decision. Most people have developed a passion for what they do. It feels like work is part of your identity. It may come as a shock when all of a sudden you’re not going to work every day and seeing your co-workers, customers or clients. In some cases you may feel like you’ve lost your sense of purpose. Feelings of isolation and uncertainty are not uncommon.
But don’t worry, with a little planning you can avoid these regrets.
Lacking to Plan for Retirement Financially AND Socially
We are constantly bombarded with hearing we need to financially prepare for retirement. Save more. Contribute to your 401k. This is all true. Financial preparation for retirement should be kept as a priority throughout all of your working years. But what about the mental preparation for retirement?
Most people have this blissful image of retirement with no worries. That can wear off. Lacking to plan for social activities, hobbies, or other things to keep you busy in retirement can be a huge mistake. Developing a clear, detailed picture of retirement is key.
What do you want in retirement? What do you want to do? How will you spend the extra 40-60 hours each week? Where will you live? When we strip away work and the social aspect of it, days can be long, uneventful and even lonely. Having clarity around your plans, will help ensure you enjoy retirement… on your terms.
Over Spending Too Soon
You have saved… and saved… and saved. You feel confident you’ll have enough to retire on and live out your days with no financial stress. Believe it or not, regardless of how much you save for retirement, it is possible to drain your savings. This is because some retirees neglect to adjust their lifestyles in retirement and fail to budget accordingly, especially in the early years. Knowing how to make finances last while still being able to enjoy retirement is important.
When you no longer have earned income, you have to monitor your spending and keep it within your budget. Avoid making the mistake of living too lavishly when you first retire. You may drain your savings and investments leaving significantly less to live on. Remember you have 20-30 years in front of you. Spending is not a sprint. It is a marathon. Be mindful of the years ahead. Travel and entertainment are great social activities, as long as they are within your retirement budget.
Relocation Without a Test Drive
Vacations are easy to fall in love with. You’re not working, you’re relaxing and enjoying a nice break from reality. You may even enjoy them so much you decide you want to retire there. When you relocate as a retiree, this becomes your new reality. While this may sound perfect, here are some things to consider before jumping right in.
Finding a place where you’ll have activities to do, your comfortable with from a distance standpoint and weather wise are all important. The Buffalo, NY weather definitely has its challenges come winter time. However, hurricanes, tornadoes, earthquakes, flooding, extreme humidity, bugs, severely hot weather, and wild fires are all things experienced in areas retirees tend to settle. Consider these lifestyle adjustments before you decide to commit to relocating there year round.
Some retirees also neglect to think of how hard it will be to be away from their families, children and grandchildren. Or they may have misconceptions about how frequently there family will visit, or vice versa.
The important lesson is that if you are relocating, beware of doing it spontaneously. Talk with your loved ones and your financial advisor. Test drive the location throughout all seasons and create realistic expectations. Discuss with your financial advisor the logistics of relocating.
Retirement is to be enjoyed. If that means being a “snow bird” for a few months out of the year, you may not want to relocate permanently. Do what will make you happiest, but keep in mind any factors that may influence that happiness.
Taking Care of the Kids… Again
If you’re a parent, you’ve likely put your kids needs in front of your own since the day they were born. Wanting to help your children or grandchildren is a nice thing to do but do it mindfully.
When you retire, your savings may have to last 30 or more years! That is a very long time and has only gotten longer as life expectancies have increased. Giving away significant amounts of your retirement savings to help your children out of a bind, pay for your grandchildren’s college or weddings is fine, but here are a few scenarios to consider. Before doing this make sure you consider unexpected emergencies or medical needs and your ever increasing longevity.
Will your retirement savings be enough?
Consider any of these possible situations before offering to help children or grandchildren. Retirees who have found themselves in that situation wish they had thought it through better, before they offered significant financial help. Chances are, your children may not be able to support you financially if you run out of money.
Putting off Estate Planning
Too often people neglect to talk about their estate planning needs while they are healthy and thinking clearly. It can be uncomfortable to talk about death with your family, but this is something that should not be ignored. Retirement should be a time to begin establishing a formal plan of action, if it isn’t already in place, to handle the “what if” something goes wrong.
Most people retire while they can still enjoy life. This is a great opportunity to review, update or begin drafting your estate plans. Don’t let procrastination create significant future problems for your family and loved ones. Not only will you have peace of mind, but your family and loved ones will know what you want done after you are gone. Plan early, review often, and then update as needed.
If you’re looking to retire or have already retired, keep these concerns in mind. There are plenty of details to review. Doing this upfront will help you enjoy retirement and worry less about the unexpected!
Should you have any questions or like to discuss your options, please feel free to call us at 716-662-4470.