by | Sep 28, 2018 | Personal Finance | 0 comments

Ever wish you had a friend who had successfully retired and could tell you what you need to do?You’re not alone.  After helping clients to retire successfully over the years, I’ve observed there are some common, practical steps that help lead to a smooth transition.

Whatever retirement may look like for you, here are a few things to think about before making the leap.


The Top 5 Questions to consider when thinking about retirement:

How will you get your healthcare?

At age 65, you’ll need to sign up for Medicare.  But Medicare doesn’t cover everything.  What will you need outside of Medicare coverage?  This will depend largely on how much and what type of care you need.  How often do you visit your primary care physician?  Are you on prescription medications?  Are there alternatives?

A recent study by Fidelity suggested that “the average 65+ year-old retiree today should expect to pay around $5,000 a year on health care premiums and out-of-pocket expenses.”  That’s assuming you don’t have retiree healthcare benefits.  If you will get retiree healthcare from your employer, congrats!  That can help a lot to bring down that $5,000 annual figure.

Where will you live?

First, will you stay where you are, or move somewhere else?  You can find “best” and “worst” state lists all over the internet, each with their own rubric; a link to AARP’s recommendations for 2018 is here.  Moving to a different state or country can involve significant tax changes.  Good or bad, that’s something to anticipate.

Next, will you be staying in your current home or downsizing?  Either way, does your house need any major upkeep or improvements before you settle in, or sell?  You may want to plan for these renovations while you still have a paycheck, rather than waiting (and taking a bite out of your savings after you retire).

And finally, think forward to 10, 15, 20 years from now.  Do you expect to stay in your home, or move in with someone else, or perhaps to an assisted living facility?  You may not know all these answers now, of course, and that’s OK.  Giving this some thought can at least help you to clarify what you would like and to plan so that you have more likelihood in making it happen.

What will you do?

This question touches every aspect of retirement living, not only the financial.  I counsel all my pre-retirees to think about what they will retire TO, rather than what they are retiring FROM.  In other words, rather than thinking of retirement as the end-game or finish line, instead think of retirement as the start of a new lifestyle, like getting married or having a baby.

What will be different?  What will remain the same?  Will you work part-time, and if so, where?  How about volunteering?  What social activities will you be doing (church, clubs, recreation)?

This is the crux of retirement planning.  It helps you work through not only financial questions, but also psychological ones – which, in my experience, are the determining factor in retirement success.

If you’re overwhelmed or at a loss when confronted by this question, you can look for inspiration in myriads of retirement lifestyle blogs out there. Here’s one I personally like, featuring posts from a variety of contributors on intriguing topics.

Who else will you be with?

Like the previous question, the answers you find here touch on both your finances and your quality of life.  This is about communication.  Have you talked with your spouse or partner about your retirement plans?  No, have you really talked with them – not assuming you are on the same page?

Maybe you walk through a “typical day in the life” in retirement.  It’s OK to have fun with this, and it doesn’t even have to be about money.  See how specific you can get with the details of your retirement life.  You may be surprised by some of the answers.

And don’t limit this conversation to your spouse or partner.  Who else will be in your retirement life?  For example, are your children expecting you to be more available to babysit?  How do you feel about that?  Are your friends assuming you’ll disappear?  Do you need to drop a hint that you’d still like to be included in after-work get-togethers?

Having these conversations with your loved ones before you retire can help to set up expectations and to facilitate a smooth transition.

How much money do you need, per month?

Only after you have thought through the other questions are you ready to tackle the question of how much money you will need, and how to get it.  This question will take some space to explore, so we will feature it as the topic for next month’s newsletter!  We’ll look at some simple formulas to help you calculate this, as well as your options design the life you want – stay tuned…