LIFESTYLE Retirement  >  Are You Really Ready to Retire?

Are You Really Ready to Retire?

Are You Really Ready to Retire?
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BY STEVE WINSTON

My Boomer friends talk about retiring all the time. And I always give them the same advice: If you’re thinking about retiring … think hard!

You’ll have to make big decisions about things such as Social Security and taxes – in advance. The world as we knew it has been turned upside-down in recent years, and this decision will affect the rest of your life.

“Sadly, people often fail to ask themselves one of the most important questions about retirement,” says Alice Reiter Feld, a well-known South Florida Elder Law attorney. “And that question is this: Are you sure you’re ready – emotionally – to retire? It doesn’t matter how much money you have. If you’re not ready emotionally, you may end up miserable.”

If you’re considering making the break, ask yourself these questions:

AM I REALLY READY?

Because of the loss of our financial security-blankets in recent years, people are working longer. If you enjoy your job, maybe you should keep working. You don’t want to have regrets afterward.

It will allow you more time to build up your savings for the day when you really do want to play golf instead of office politics, and more time to pay down your mortgage. Once you retire, it can be difficult to un-retire.

CAN I REALLY LIVE ON A SMALLER BUDGET?

“If you think it was hard staying on a budget during your working life, you ain’t seen nuthin’ yet!” Reiter Feld says. “In fact, it often gets more expensive to live after you retire, because you’ll probably be spending money on things you never had the time to spend it on before.

You’ll probably be traveling more. Seeing more movies or ballgames. Playing more golf. Going out with friends more. And perhaps buying more ‘toys’ for yourself.”

The Web can be a resource. Mint.com, for example, can help you figure out expenses that may end with retirement … and those that may begin.

Some experts advise a trial run, by living on a projected “retirement budget” while you’re still working. It’s hardly a scientific method. But it might buy you some time to develop coping strategies.

We’re talking about the rest of your life; retirement is generally forever. And if you’re not ready – emotionally or financially – you may want to wait.

CAN I PUT OFF TAKING SOCIAL SECURITY?

Let’s face it, for some of us, it’s hard to resist taking the money and running when we hit 62. For others of us, it may be a matter of need. But keep in mind that “full-retirement age” isn’t until 66…and, if you start taking benefits earlier, your monthly check will be reduced. So, if you’ve got a bit of a nest egg, consider waiting a while. And if you can wait until 70, your benefits will be even higher.

For those eligible at age 66, waiting just one year will result in monthly benefits equaling 108% of the previous amount. And waiting until 70 would generate 132% of the regular monthly benefit!

“In fact,” says Reiter Feld, “you can nearly double the amount you’ll get at 62 if you can wait until 70.”

HAVE YOU SPOKEN WITH YOUR ACCOUNTANT?

Most of us speak with our accountant just once a year – at tax time. But don’t dare consider retirement without doing it! He’ll probably remind you, for example, that a big chunk of your IRA is going to Uncle Sam when you withdraw it. And you’ll need to prepare for that.

Consider a financial planner, too. Together, they can develop a strategy for your taxable and tax-sheltered accounts. And they can help you decide whether to convert to a Roth IRA, where withdrawals are tax-free…but conversions are not.

WHAT ARE YOU RETIRING TO?

Are you ready to make the most radical change of your life? Are you ready to change the daily routine you’ve probably been doing for some 40+ years?

And are you ready to seek out new pursuits and intellectual challenges, so your life stays interesting, and your brain healthy?

DO YOUR HOMEWORK!

Retirement experts say that you should study your retirement options as if it was one of the most important decisions you’ll ever make. Because it is. And, in most cases, it’s permanent

“Failure to plan is one of the most common reasons retirees run into problems,” David Laster, director of investment analytics at Merrill Lynch Wealth Management, told the Nashville Tennessean. “In one survey, by the Employee Benefits Research Institute, only 42 percent of workers try to calculate a budget before going into retirement. If you don’t do that, that leaves you vulnerable to some unpleasant surprises in retirement. And it can be painful.”

John Sweeney, executive vice president of retirement and investment strategies at Fidelity, emphasizes the importance of speaking with a financial professional before you retire; afterwards, it’s akin to locking the barn door after the horse is already gone. He advises people to pay off their mortgages, if possible, and to reduce expenses. And to continue to work if at all possible, assuming they don’t hate their jobs.

The cliché about “those who fail to plan” probably wasn’t written about retirement. But it may as well have been!

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