Sometimes it’s hard to know when you’re truly “ready” to make a significant transition in your life. When it comes to retirement, it’s not like you have a big flashing sign that alerts you to when you have enough money, you feel emotionally prepared, and you’re excited about the next step.
At this point, you may be asking the question—how will you know when you’re ready? Here are five signs you could wake up tomorrow and undoubtedly be ready to retire.
1. You’re Confident In Your Nest Egg
What’s the most prevailing concern among modern retirees?
If your answer involved money, you get a gold star.
The number one fear for nearly 50% of retirees is outliving their savings, according to recent data. And the effects of the pandemic certainly haven’t made anyone’s optimism levels rise.
One way you can feel more secure heading into your golden years is by ensuring your nest egg is where you want it to be. Yes, this includes reaching your “retirement number,” but it also means having an investment plan for after you retire, a healthy withdrawal strategy, a plan for taxes, and more.
- Have you reached your particular savings target?
- Have you reviewed your risk tolerance and analyzed how it may change after you retire?
- Are your investments on track, and what adjustments will you need to make to your allocations?
Once you feel confident about your investments, turn your attention toward your other income sources, like Social Security benefits and pension payouts. Both of these vehicles can significantly impact your retirement income plan.
Ensure you have a plan in place for enrolling in Social Security.
- When do you plan to enroll? There are three general times: early at 62, at full retirement age, or late at 70. Each comes with benefits and drawbacks.
- Have you planned for spousal and survivor benefits? Married couples have unique opportunities to maximize Social Security, so making the most of them is important.
If you have a pension, do you know which payout option is best for you? Your monthly check depends on your selected payouts. To help decide which is best, read all about pension elections in our pension series.
2. Your Healthcare Plan Is In Tip-Top Shape
Did you know that about 15% of a retiree’s budget goes towards healthcare?
It’s a high cost that you must account for before retiring. Ask yourself,
- Are you aware and educated on your options for Medicare?
- Do you have easy access to your doctors and specialists?
- If you decide to retire before 65, do you have a plan for coverage (COBRA, spouse’s health care, etc.)?
- Do you need any other types of protection like long-term care insurance?
- Are you saving in your health savings account (HSA)?
The stars will align for you in a perfect world, but you need to be sure you are fully aware of possibilities and are well prepared.
3. You Know What To Expect From A Tax-Perspective
Taxes and tax planning are some of the most significant financial hurdles in the retirement process.
Before you retire, you’ll want to create an investment withdrawal plan that is tax-friendly and supports your aspired lifestyle. What does this look like? We can help you decide when and how much to withdraw money from specific accounts.
For example, you may want to make fixed-dollar or percentage withdrawals from each account every year. We love helping retirees create sustainable income plans that set them up for retirement success.
While you know it’s essential to keep your tax liability at bay, how do you actually pay taxes as a retiree?
You can elect to have certain income sources like Social Security, pension payments, annuity payments, etc., withhold taxes for you, which is super helpful!
But if you receive substantial income from investments that do not automatically withhold taxes, making quarterly estimated tax payments allows you to avoid underpayments that may result in fees and penalties.
4. Your Estate Plan Is Up To Date
Creating a fulfilling estate and legacy plan is critical for any sound retirement strategy. While you may have drawn up your will ages ago or assigned beneficiaries when you first opened your life insurance policy, it’s often wise to take a look at your estate documents after a sizeable life transition, and retirement certainly fits the bill.
Ensure you can confidently answer the following questions:
- Have you updated your beneficiaries on things such as your investments, retirement accounts, insurance documents, etc.?
- Do you feel confident in your digital estate plan? Do you/your executor have access to digital passwords, logins, and other protected information?
- Would you like to leave an inheritance to your children? Have you considered the way you wish to divide your estate?
- Do you know who will play foundational roles like the executor, trustee, powers of attorney, health care directive, etc.?
- What’s your plan for personal property, i.e., who would you like to receive your book collection, artwork, jewelry, etc.?
- What do you want your legacy to be?
Your estate plan is a rich area to extend the incredible life you live.
5. You’re Excited About Your Lifestyle Plan
While financial readiness certainly plays a vital role in the retirement planning process, emotional and mental preparedness is just as important.
It’s essential that you’re excited about the next phase of your life, and to do that, you need a lifestyle plan you can’t wait to start living. Not having a plan can make the transition much more challenging.
Remember, planning for your life is just as crucial as planning for your money! After all, you have worked hard to create a life you will enjoy.
Think through your next chapter, and start small. Do you know how you will fill your time? What does a Tuesday afternoon look like? Moments that feel small—coffee with your spouse, Tuesday volunteering, Thursday yoga, weekend babysitting, etc.—may turn out to be the most foundational and defining ones of your retirement. The layout of your day-to-day routine should fulfill your needs and goals.
It’s important to be intentional and find purpose in each day. You may find meaning through volunteering, encore career, part-time work opportunities, a passion project, getting involved within your community, working on relationships with those you care about, etc. You just have to find what works best for you!
Work With A Team Who Cares
After reading this, are you feeling more confident in your ability to retire?
Remember, there are numerous things you can do to create a comprehensive retirement plan that supports your goals. One of the best ways to achieve peace of mind that you can retire on your own terms is to work with a team you trust who knows your plan and is excited to see you live it.
We are happy to assist you in setting up your plan that puts your happiness, fulfillment, and financial well-being first. Schedule a call with us to learn more!