I always joke that I’ve retired more times than people you likely know. I say this tongue and cheek, but the reality is it is probably true. Now, of course, I’m not referring to myself, as then my wife might divorce me. I am however referring to the countless individuals, and families I’ve worked with that have made the “big transition”. I like to think with experience comes knowledge, and with knowledge comes the ability to educate. So, in that theme, I’d like to share my top 10 retirement tips.
Top 10 Retirement Tips
- You will know when you are ready. Big transitions in your life don’t require someone else to tell you when you are ready. They, in a way, can’t be forced. I say this about many things such as getting married or having a kid. No matter how much pressure you are under, I find your body just knows when you are ready to take that next step. The same holds true with retirement. You’ll know when you are mentally ready, when you are mentally ready.
- Just because you are mentally ready, are you financially ready? My next tip is to stress test your retirement income and expenses. This is a critical step as most people don’t meticulously budget, and have been reliant on some company to pay their expenses for the past 40 some-odd years. Once retired, this whole equation gets flipped on its head. Do you feel confident in your ability to have your assets and fixed incomes meet your expense needs? This is a very scary proposition for most, and one we pride ourselves on solving here at Diversified.
- Give retirement a test drive. Speaking of making sure you are financially ready, why not spend the year or so leading up to retirement taking a real audit of your ability to meet your needs? You’ll feel much more confident in your ability to retire if you’ve actually taken notice of your cash flow leading up to retirement. Most people I meet simply retire without actually understanding what it entails. Don’t make the same mistake as so many that have come before you. It is one of the biggest decisions of your life and should be treated as such.
- Retire to something not from something. I’ve spoken about this before many times. One of the big mistakes I see when it comes to retirement is people running from something, and not quite running to something. I find this leads people to either retire when they aren’t ready or retire and not maximize this precious time in their life. I’d suggest doing some real soul searching to ensure you are living your best retirement life.
- Take care of big expenses now. Have you been wanting to redo that kitchen, or purchase that dream car? Trust me when I tell you that you will feel a lot better doing it while still working. Sometimes these things end up costing more than we think and you’ll be sweating it out if it is eating into your retirement savings. Now, I certainly recognize unforeseen expenses arise during retirement. That said, do your best to get them done now. If they cost more than anticipated you can always work a few extra months.
- Do an investment audit. Really understand what your investment philosophy or strategy will be come retirement. I find it best to consolidate your investments as much as possible and create an investment policy statement. One that will guide your beliefs and strategies long into retirement. You can’t afford to make big emotional mistakes now that you are relying on these funds to supply a good bulk of your retirement income. Roll all those old retirement plans into an IRA, work with someone that is knowledgeable (like us) on this task, and make sure you stay resolute in your strategy. You’ll be given many tests during retirement and those that stay the course almost always are poised for success.
- Retirement date. Another one of my favorite retirement tips. Many of us retire and then go figure out what that lifestyle will look like. They rush to buy a second home, an RV, or a boat. Then they realize they don’t utilize them like they should, or even worse feel obligated to use these things when they really don’t want to. Instead, why not spend the years leading up to retirement testing the waters so to speak. See where you want to live, or what activities you want to fill up your time. How much time do you see at these places and what is the most economical way to enjoy this ideal retirement? Figure this out now, not when retired and you will be much better off for doing so.
- Understand how Social Security & Medicare will factor in. Two of the bigger components of retirement are Social Security & Medicare. Most of us know we have been paying into these things for decades. What most people don’t know is all the Social Security strategies and when is optimal to collect. As for Medicare, there are multiple different plans to go with and major penalties if you forget to file (age 65). Additionally, there are additional charges in the form of IRMAA if you make too much money that most people don’t recognize. Another reason to work with professionals is to align your benefits, with your incomes, with what is best for you. Many of these decisions are irreversible and you really want to get them right the first time.
- Think through unforeseen expenses. There are many unforeseen expenses one encounters during retirement. Health care costs are a concern for almost everyone and it isn’t even close. One of the biggest expenses most people will have is health care in retirement. This covers insurance costs, provider care, and long-term care expenses like nursing facilities. These things can cost a fortune and if you aren’t prepared your last years on this planet may drain you financially.
- Follow your passion. Carpe Diem my friends. Retirement is a time to live life to the fullest. As we say here at Diversified, it is time to live your happiest, healthiest, and wealthiest life yet. Wake up and follow what truly makes you happy. Is that your family, travel, or volunteering? Doesn’t matter what it is, but if you aren’t purposeful and grateful about it you’ll find time will simply pass you by. Scientifically, these years are some of the happiest in a person’s life. That said, happiness takes work, so get busy working on it.
There are many other things to consider when planning for, and living through retirement. We here at Diversified take great pride in partnering with individuals to help navigate these exciting, but yet scary times.
One thing I’d like you all to consider. Although retirement is a special time in one’s life there is sadly an end to it. Most people run from this fact, which leads them ill-prepared for the end. Instead, have uncomfortable discussions with your loved ones about what you’d like the end to look like. Because if you do so, not only will you live your ideal life, but you’ll have the ideal ending as well. Hate to leave you on that note, but it is something not enough of us readily discuss.
Hope you enjoyed this entry and as always stay wealthy, healthy, and happy!
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