The Key to a Quality Retirement is Quality Retirement Planning

The Key to a Quality Retirement is Quality Retirement Planning - by G. M. Fyden                                                                                                        

After 3:00 PM on weekday afternoons it’s not unusual for American workers to look at the clock and contemplate quitting time. For workers in their forties or fifties that glance at the clock on the wall is often followed by at a glance at the calendar on the desk. If you’re approaching age sixty-five, thoughts about the end of the day commingle with thoughts about the end of a career. And-rightly-so; both of those inevitable eventualities are, after-all, advancing towards you at the same rate of speed.  

When it dawns on you that late afternoon has arrived, an honest assessment of your day (so far) and a plan to finish strong are well warranted. The same principle applies when you discover that retirement is approaching.  

Make Financial Security a Priority

Some aspects of retirement are, to a large extent, beyond your control. Most notably, your physical health (and that of significant others in your life) and the state of the future economy. And while we can’t always know what’s in-store, we can take steps to manage the things that we do control. Specifically, we can develop and implement a retirement plan with the aim of securing an adequate lifetime income and a sufficient liquid savings.

Visualize Your Perfect Retirement

When you’re slogging through a long, hard day you might imagine that doing nothing for the rest of your life is a worthy goal. I doubt that’s true – boredom might be worse than tedium - but fantasizing about your ideal retirement can be a valuable pastime. You need to know what you want in retirement if you’re to have any chance at achieving it.

Think about what activities will be able to keep you engaged for years at-a-time. Consider goals you’ll still want to accomplish even after you’re done working.   

Will you shun work altogether, or are you open to part-time employment in your golden years? Do you want to travel the globe, or plant yourself in the perfect place for you? Will you volunteer your time to others once your time becomes your own? The answers to these questions and dozens more like them will shape your retirement and greatly influence your retirement plan.

Estimate Your Income Needs

Some annual expenses will go down in retirement. You won’t have to spend on gas for your daily commute, and you won’t have work clothes that constantly need dry cleaning. On-the-other-hand, many costs increase once you have more time on your hands. Travel and entertainment expenses, for example, tend to rise in retirement.

Speaking very generally, you may need as-much-as 60%-80% of your working income in-order-to maintain your lifestyle in retirement. Your actual income needs will depend on how you intend to spend your retired years. Will you downsize and spend modestly or will you live it up as you age?

Don’t forget to factor in inflation (historically 1%-4% a year), and remember that healthcare costs will tend to rise dramatically as you get older.  

Your target income is the cornerstone of your plan. Give it the consideration it’s due.    

Evaluate Your Finances and Budget Your Income

Your retirement assets will be a function of your current assets. A simple, honest assessment of savings, investments, and income, as-well-as a budget that takes the future into account, are critical components of an effective retirement plan.

You’ll need to evaluate what you have, compare it what you’ll need, and arrange your budget to make up the difference. There are numerous, online tools, websites, books, videos, and, and financial professionals that can help with this process. Just be careful who you give your trust and your personal information to.

Being aware of your financial situation will highlight the progress you’ve made and let you know how far you still have to go. A budget will remind you to pay into your retirement accounts just like you pay other important bills.   

Insure the Future

One of the biggest mistakes people make when planning for the future is forgetting that sometimes things don’t go as planned. That’s why insurance and estate planning should be an integral part of retirement planning.

Do not neglect health insurance concerns when thinking about your golden years, especially long-term care insurance. One uncovered illness can devastate a retirement account. Even a short stay in a nursing home or assisted living center can destroy the net-worth of an unprotected retiree. Keep up-to-date on the senior health insurance market and maintain your coverage. Look into long-term care insurance and buy what you can afford.

Likewise, it’s smart to keep your life insurance, and overall estate plan (wills, trusts, medical proxies) up-to-date. It’s much better to have these safeguards in place and not need them then to need them and not have them.  

One Step at a Time

Retirement planning can seem like a daunting task, but when you look at as a series of simple, logical steps the process becomes much less intimidating. In the end, the quality of your retirement will depend on the quality of your planning.