Are you coming up to your retirement? Everyone wants to retire and begin their journey of leisure., but it’s important to make sure you are prepared for what it entails.
By answering these questions will help put you on the right track.
1. Your living Situation
Where you live will have a large impact on your checkbook. Cost of living and taxes can vary depending on the city and state you live. For example, in some places you will find taxes on your social security benefits and pension, while in other states these income sources are tax-free. You’ll have to disburse your any savings or benefits much faster in some locations to cover the basics.
You will need to consider not only the geographical location but also whether you are planning to stay in your current home. If you have a larger property, you’ll need to make certain you’re not only able to cover property taxes, utilities, and other mortgages on such a little fixed income, but also you may need to keep the property as you age.
2. How Will You Spend Your Time
Retirement should be the happiest time of your life, but for many people, the work provides their days with a social life and structure that is sorely missed. Many people do not plan for these changes and often end up being bored or depressed. Make sure you have a plan on what you will do to stay active.
While you don’t have to fill out your day planner entirely, you should have an idea of what you are planning to do with your retirement years. If you’re going to renew your gardening days, you’re going to have very different needs to spend than if your desire is to be a world traveler.
3. Claiming Social Security Now or Later
The age that you claim your social security will affect the amount you receive. Even though there is no requirement to start claiming your checks when you leave the workforce, the check usually are small and a lot of retiree’s are not able to survive without them.
If you leave the workforce and have to start claiming your benefits , make sure to understand your choice and know what to expect in your checks. When you find that if you retire at 62 you will shrink your benefits by 25% compared to your full retirement age. Why not decide to work a little longer and then you will not take as big of hit your retirement benefits.
4. Additional Income
For most people that are retiring, Social Security can not be the only source of income to fallback on. If it is prepare yourself to live just above poverty. You will need to figure out where all other additional income will flow.
It’s not like the good-ole-days when your employer would offer a pension when you retired. A lot of retiree’s will depend on their savings from over the years. If that is your case, take a closer look at your investment accounts and calculate how much income they will generate for you at a safe rate of withdrawal. Then make sure to check your Social Security to see the benefits that you may receive.
By calculating the amount of income your expenditure and benefits will yield, if you retire now, you will get an idea of the funds available.
5. Standard of Living
Finally, consider what you will need to spend on living the lifestyle as a retired person you want.
A good rule-of-thumb is that you will need to restore up to 90% of their pre-retirement wages to maintain their living standards, but you might find that you’re going to save a lot if you’re going to live in lavish and spend you golden years with expensive hobbies. Start planning a budget, this will help give you a realistic idea of your spending habits.
After doing the math and calculations of the money you’ll need, Compare that with your projected revenue from all sources once you know how much money you’ll need. If you find that you’ve got plenty of money, a draft for your days and an idea of where you’re going to live, you’re likely ready to retire. If you discover that you don’t have enough cash or a clear idea of what you’re going to do in your later years, you should plan a little more before you give in your notice.