8 Most Essential Things To Know Before You Retire
Right from expenses to lifestyle, there are a lot of things to know before you retire and to think about in retirement, for most people, retirement is a monumental change in life where they rest after their working life. However, with these questions, “Do I have enough funds saved? What will I do all day after retirement?” you might ask yourself those few questions. And yes indeed, retirement is one of the biggest transitions in life that most people will ever undergo and there is a lot to think of it.
An instance, most decorated athletes and celebrities of all time mostly decide to un-retire and they do it not because of money, but because they come to the realize that their best is still on-work and not in the standstills. This illustrates the complex web of things to know before you retire or finally deciding to go on retirement. Yes of course, for the typical working-class person, money is a big factor though but it isn’t the only factor to consider. In this article, i will walk you through things to know before retirement.
Preparing For Retirement
Retirement is the transition from work-life to home-life after years of working. Many people work towards retirement in life with the hopes of enjoying their “golden years” in soundest happiness and comfort. To prepare well for such a milestone, consider the top things to know before retirement.
1. Retirement Is a Major Lifestyle Change
The first things to know before you retire – Before we go into money concerns in retirement, let’s get one thing out of the way. Retirement isn’t just a financial change, it’s a lifestyle change as well. You need to understand that retirement life doesn’t have the built-in structure that working life do. All future retirees need to think about how they will create purpose in their post-work life. Most people do use their lifetime of experience to become a part-time life coach and consultant. This allows you to continue to receive a desired stream of cash flow while also controlling who they work with and how many hours they work as well.
2. Expenses Don’t Always Decrease
A recommendation to those who are nearing retirement is to plan and maintain 70% to 80% value of your income while you were employed with same after you retire. The rationality is that, your expenses will decrease since you won’t have to commute to the work every day. Also, you may not eat out so often without those daily lunch breaks as you used to at work. It often isn’t the case, expenses typically do not decrease at all or potentially even go up during the more active years of retirement. Therefore, it is critical to run scenarios, assuming that your expenses will stay at least the level they were the last 3-5 years prior to retirement. You wouldn’t be able to decide how much money to save if you don’t know how much money you need on a monthly basis.
3. When Will You Start Claiming Social Security?
The things to know before you retire also includes the time to start claiming social security. You may not know exactly when you will start claiming your social Security benefits, especially if you have not yet determined when you will officially stop working. Perhaps you want to retire a few years early because you have substantial savings or your health isn’t what it used to be. In that case, you could start Social Security payments as early as 62. However, starting Social Security early has its downsides too.
One of the biggest downsides is that your payments will be reduced. Conversely, payments are increased if you delay it. This means using 401(k) funds as a source of retirement income that helps you delay electing Social Security. You can increase your Social Security payments by as much as 8% annually which depends on your birth year, if you delay payments until age 70 pays most.
4. Retirement Is Increasingly Gradual
Including things to know before you retire is that, retirement is increasingly gradual these days.
For many years, there was this idea that you would clock out one last time and ride off into the sunset, never to be seen at any office again. Retirement doesn’t happen in a single day, it now happens over a longer period of time, a survey revealed that just 29% of small business employees say the definition of retirement is “leaving the workforce permanently and never working again. Well, this takes us to the initial point of “retirement being a lifestyle change”. Nowadays, working arrangements can be more fluid and people don’t always go from 60 to zero all at once.
5. Pay Off Higher Expenses Before You Retire
Grounding up, things to know before you retire, look to paying off higher expenses. If you have expensive dreams you desire to achieve before you retire, it is logical to invest in them while still working. The finest cars, home improvements and luxury travels are things to look into while you still in the working life. Mostly, these non-essential expenses of life usually cost more than expected and you don’t have to touch your retirement nest egg should you go overspend your budget.
7. Observe Your Investments
Observing your investments is part of the things to know before you retire. Understand your investments and guide your strategies accordingly. It is best to consolidate your assets as much as possible and create an investment policy statement. Recommending rolling old retirement plans into an IRA and making sure you stay resolute in your planning on retirement.
8. Work With a Financial Advisor While Preparing to Retire
Finally on things to know before you retire is to find a financial advisor when preparing to retire. Working with a financial advisor as you prepare for retirement is highly recommended. It makes sense, since a financial advisor can help you with a wide range of questions and concerns related to managing your retirement.
An example, a financial advisor can help you determine whether you have enough funds saved to retire or not. If you do have enough, they can help you decide how much you can comfortably withdraw from your investments each year. Financial advisor can also answer a variety of other questions, such as minimizing the tax impacts that come with selling investments. It’s almost always worth it to meet with a financial advisor before you retire. Doing that will ensure you can retire safely and have the peace of mind you need after a long and prosperous career and working life
