Are You Ready to Retire? Ask Yourself These 5 Questions
Filed under: Retirement
It’s normal to feel antsy about retirement as you approach the date. You’re tired of the same old office routine, and you’re ready to move into the next phase of your life. But before you take the leap into retirement, ask yourself these five questions to make sure you’re really ready.
What does your current budget look like? Chances are, your retirement income won’t be exactly equal to your current income. That means that once you retire, and begin living on the stream of income you have established for yourself, you will probably need to cut back on some expenses. Take a look at your current budget so that you have an understanding of which “extras” can stay, and which ones need to go. Then try to gradually cut back on those expenses in the year leading up to retirement, so that your new lifestyle isn’t such a shock.
Can you cover emergency expenses? No matter how carefully you plan your retirement budget, there will be surprises. What will happen if you need a new roof or an expensive car repair? Make sure you have a reliable plan to cover emergency expenses; cash set aside in a savings account is usually best.
What about out-of-pocket healthcare costs? Younger people often operate under the misconception that once they retire, Medicare will cover 100 percent of their medical expenses. That simply isn’t true. You will still be charged co-pays and deductibles, and some of your prescriptions and necessary equipment might not be covered. Before you retire, make sure you create a realistic budget for medical expenses, and consider products like long term care insurance or Medicare supplemental insurance plans to help you manage rising costs.
Do you really want to keep making that huge house payment? If you expected to pay off your home loan before you retire, then congratulation! You’re part of a lucky minority. If not, then ask yourself whether you really want to keep making a large house payment. Many retirees sell the old family home, access their equity, and are very happy paying cash for a smaller home or condo. It could be nice to live mortgage-free!
Are you still paying off old debts? Be honest with yourself about your debt load. The last thing you want to do is enter retirement and live on a fixed income while dealing with those debts. Even if you have to work a bit longer to pay off credit cards, it is usually worth it.
For more information about retirement, call our office to schedule an appointment. We can help you review your retirement plan and decide upon a time line that is right for you.