Retirement is one of the most common goals for people across all careers and can be one of the most significant milestones in our lives. However, retiring entails so much more than picking a date on the calendar to stop working. It’s an entire life overhaul that requires years of thought and planning in order to make it happen.
While being financially prepared for retirement is paramount, one of the most common oversights we see when people are preparing to retire is that they are thinking strictly about the financial aspects of no longer working. Yet, retirement comes with many non-financial questions that you should be asking yourself as well throughout your planning to ensure you can fully enjoy and embrace retirement.
Here are ten financial and non-financial questions that you should be asking as you head towards your retirement years.
- When can I retire? There are many factors to consider when picking the age you want to retire. About 3 to 5 years ahead of when you plan to retire is when you’ll want to start getting specific with the timing of your retirement. Checking in on where your savings and retirement accounts are is an important factor to consider as well as what your post-working expenses will be to determine how much longer you need to work. Picking an age goal to retire will help you to refine your investments, budgets and career path so you feel prepared for the next chapter.
- How much money do I need? A common guideline for how much money you’ll need to retire is the 4% withdrawal rule. If your expenses are in line of 4% draw on your balanced portfolio, then you should outpace inflation. However, you’ll want to take other life factors in account such as the post-retirement lifestyle you want to live, travel or new hobbies, and any kind of nursing/retirement care you may want or need later in life.
- What do I need to do to minimize my taxes? There are many connections to consider when trying to minimize your taxes in retirement such as where your assets are located, what is included in your modified adjusted gross income and how does that affect your medicare part b and d premiums. What accounts do you draw from first (the retirement or non-retirement accounts)?
- How do I transfer my estate tax efficiently? Do you have a trust or will centered plan? How are your beneficiary designations titled? What is your state estate and/or inheritance tax laws? What are your heirs tax bracket (now or in the future)? How will inherited retirement accounts affect them? What can you do about it while still living?
- What type of estate documents do I need? A dreaded but incredibly necessary step for retirement is ensuring all of your estate documents are in place and up-to-date. From the distribution of your assets to trusts and much more, it’s important to speak with an estate attorney about all the documents you need.
- How will I structure my day/week? One of the hardest transitions we see with our clients who retire is figuring out how to fill their days in a meaningful way once retired. The eight hours + you always dreamed of having as your own can be jarring if you don’t have any structure lined up, especially during the early years of retirement. Consider creating a schedule for yourself comprised of hobbies, family and friend time, travel and anything else you plan to pursue as a way to slowly transition out of your work routine.
- Where will I find purpose and meaning? This is one of the most challenging aspects of retirement. Our careers not only consume a major chunk of our time, but also our energy, passion and purpose. Finding new passions is an important part of creating a meaningful existence in retirement. Ahead of retirement, start making a list of any hobbies or interests that you’ve always wanted to pursue but didn’t have the time, or possibly existed previously but now you dedicate more time to the activities.
- How prepared is my family for my retirement? People often think of retirement as an individual plan, when really it entails the whole family. Have you talked to your family about your retirement plan and goals? Or what you think your daily life and activities will look like once retired and how that may affect them? Having these conversations in advance of retirement can make the transition smoother.
- What if I want to return to the workforce? While retiring seems great in theory, it’s not right for everyone. You may retire and decide you want to return to work or return to the workforce in a different capacity than your previous career. Coming to terms with this as a possibility and what the options could be can be a helpful way to manage expectations and fears should this desire arise once retired.
- Who is dependent on you and for how long? Do you have children, parents, or any kind of dependent who will be relying on you financially and/or caregiving in your retirement years? It’s important to factor this into your decision process as you finalize retirement plans and financial needs.