5 questions to ask yourself as you plan your retirement
How to Envision Your Future Retirement
When planning for a far-off retirement, many Americans focus on whether they're saving enough and where to put that money. By spending time reflecting on what that future retired life will look like, you can put a more accurate price tag on it and stay motivated to make it happen.
So what kind of retirement lifestyle should you plan for? Many times, our only understanding of retirement is what we see around us — our parents, grandparents, neighbors, and friends.
A good place to start when considering your retirement is to ask: What is your personal definition of retirement? Most would consider retirement, in a basic sense, as the end of actively working. If you'll be counting on Social Security income and/or Medicare coverage at that time, you're probably looking at retiring in your mid-60s or so. Decide how old you'll be when retirement happens, and then build a life for that version of yourself. Below are some questions to ask yourself.
1. What does your retired life actually look like?
This is the perfect to time to let your imagination guide you. Write down a list of potential wants, needs, pros, and cons. Where do you want to live? Do you intend to age in place staying in the same community you’ve been for years? Perhaps travel will be a key focus of your retirement. Do you intend to downsize? What do expect your day-to-day life to be? Maybe you’ll work part-time or volunteer in your community. Thinking these questions and comparing a concrete list of needs and wants will help you prepare and understand how much you can comfortably afford.
2. What will be your role in your community?
This is an important step that many people may forget to consider. When we retire, a significant part of our inner-circle and our role in it changes. In addition to earning a paycheck, your daily work helps you stay connected to people. Many retirees work part-time so that they’re part of a team as much as for the supplemental income. As you plan your retirement, consider if part-time work will be a part of your overall retirement finances.
3. What will you do for fun?
Retirement is an opportunity for many people to have the time to enjoy new or current interests. If you're an avid skier, you'll have more time to hit the slopes. Do you enjoy volunteering? Retirement may be your time to focus on organizations you'd like to support with your time or money. Your retirement years may be the perfect opportunity to go back to school, learn how to swim, go on an international trip, or explore your creativity through art. Consider how much these activities will cost and what you’ll need to ensure you can afford them.
Whatever you decide, understanding the activities you want to pursue during retirement will help you determine how much you’ll need to have in savings and begin to formulate a budget plan for once you’re actually in retirement.
4. How will other people impact your retirement?
One area that can be challenging to think about is how your immediate or extended family may impact your retired years. Will you be asked to contribute financially to your children's or grandchildren's needs? Some individuals find themselves in unexpected caregiver roles that affect their financial plans.
5. What does your health look like during retirement?
Health and wellness factor significantly in our daily lives. Having an action plan for maintaining our ongoing physical and mental well-being is an important aspect of retirement planning. Fidelity found that couples who are 65 and retired in 2020 may need upwards of $295,000 saved for healthcare costs.
Consider the following questions beginning with the most important one:
- What will you need to spend in order to maintain your continued good health as you age?
- Would you like to take fitness classes or meet with a therapist to manage your mental health needs?
- Will you need to pay for caregiving resources?
Again, having a clear vision of this part of your retired life will also help you leverage savings and discounts available to retirees.
Don't consider your retirement the end
While a significant part of planning for one's retirement is focused on the financial aspects of post-work life, it's equally as important to spend time actively envisioning and focusing on what your life will look like after you step away from the workforce. Don't miss this step in planning for your retirement as there are a number of very real financial implications to consider during the process. The planning stage is just the first step to enjoying your actual retirement. Ultimately, retirement can be an opportunity to pursue a life filled with whatever makes you happy.