Just in case the post, Twenty Years On My View of Retirement, caused you to think this retirement stuff sounds pretty good. I felt it important to help you prepare.
Here are some essential concerns:
A) Make Your Financial Projections: Get a paper and pencil, a spreadsheet program on your computer, or anything that will help you with the following:
What is your projected income from now until you retire? Obviously, this is a guess. Your job might disappear tomorrow. But, based on your past situation, you should be able to make an educated guess of what you expect to make from now until you do quit.
What do you expect to receive from Social Security? Avoid the “it won’t be there for me” panic attack. We don’t know the future, but we know the present. If Social Security undergoes revisions, those changes won’t take effect immediately; they will be sometime in the future. The political cost of not protecting this vital part of our social fabric will not allow it to go away.
So, for now, use what is real today. You get a yearly report that tells you what you can expect based on your past earnings. Do you think you will have to take your payments as early as allowed, or will you be able to wait? There are logical reasons for both courses of action based on your status. Add that monthly amount to your projections.
Here’s a biggie: what about health care costs? None of us knows what the future holds in this area. Personally, the only thing I expect is prices to keep on rising, deductibles and copays to increase, and coverage to get skimpier. Plan on an increase yearly until you are eligible for Medicare or an Advantage plan. Even after you turn 65, the average American still spends $250,000 on medical care.
OK, now with those figures available to you, can you live on that for 30 years? People in good health today who are in their 40s or 50s can expect to live into their late 80s or mid-90s. If you retire around 65, you may have to take care of yourself for another 20-25 years. Can you?
B) Make Your Lifestyle projections: Your financial situation will determine the overall life structure you will lead in retirement. Lifestyle issues will determine the quality: whether it is enjoyable and satisfying. Are you ready?
Others like the roots they have established where they are, have family and friends nearby and don’t want to go anywhere. Moving to a retirement community on the other side of the country would never cross their mind. Aging in place is the plan.
Do you envision yourself in an “active adult” community, an age-restricted setup, an urban or rural environment, or selling everything and becoming a nomad in an RV?
What about the complications that arise when spouses are with each other 24/7? Trust me, this is a significant adjustment for both partners. No matter how many books on relationship building you’ve checked out of the library and how much you love your partner, being together all the time is tough without some planning.
Do you have something besides work that you love to do? If work is your vocation and avocation, what will you do when you don’t have that anymore? Do you have any interests, passions, or hobbies you’d love to explore? It is best to figure that out before you walk in the door of your house, retired, with no idea what to do next.
Many times in multiple posts, I’ve made the point that retirement is a huge adjustment for anyone. I don’t care how well prepared you think you are. There are things you have not foreseen that will happen. Such uncertainty shouldn’t freeze you in place. Life is all about change. There is no way to cover all your bases ahead of time.
So, what to do? Plan, plan, plan. Then plan some more. Consider everything you know and things you know you don’t know. Then, when the time is right for you, just do it. Be ready to throw out all or part of your planning, though. Life will evolve in ways you never had projected.
And, as I begin my 22nd year, I can vouch for the satisfaction that comes from having your time and your life under your control.