Retirement Living

8 Practical Steps to Take Before Retiring

Retirement is one of life’s events that can either be incredibly rewarding or incredibly limiting. Most retirees intend to fully enjoy their retirement, but it doesn’t always work that way. Strategic planning, preferably many years before the anticipated event, can ensure that retirement is fulfilling rather than frustrating.

  1. Adequate funding: Before a person retires, he or she should ensure that they have adequate funds to meet their needs. Surprisingly, however, many retirees find that what they thought would be adequate income for their retirement simply isn’t. Many find that they must obtain at least one part-time job to adequately cover their monthly expenses. Additionally, people are living longer and therefore need to allow for increased longevity when determining the amount of money they will need for their retirement. Many retirees say they plan to continue working at some level in order to keep themselves and their minds active and to stay involved in their field. The average age for retirement is now 69.
  2. Time management: Not having to set the alarm every morning and report to a humdrum job and a supervisor who may be less than pleasant can sound very appealing, and it will be for a while. However, at some point, especially for those who have worked all their lives, the novelty will wear off and they will be incredibly bored. Not only will the retiree be bored, but the spouse will most likely not relish the idea of having their mate around constantly. This might be an excellent time to start a business. If there is an unfulfilled dream or ambition, this could be the opportunity to start realizing the fulfillment of that dream. A word of caution, though: do not invest your life savings or go into debt to finance this venture. Start with as little cash investment as possible so that if the business venture doesn’t work, the loss will be minimal. If a new business venture is in the offing, it will take care of probably more free time than was anticipated. If not, this may be an ideal time to pursue a hobby or two or engage in volunteer work. It is vital that retirees keep themselves active and their minds functioning in order to remain physically and mentally healthy.
  3. Contingency funds: It may be a good idea to take out a home equity line of credit before you actually retire. The attractiveness of a home equity line of credit is that it is there in the event you need it, but incurs few, if any, fees or expenses until you use it. If you never use it, you will more than likely incur few fees except those charged when you initially applied for it. Again, a word of caution: use the line of credit only as a last resort and only in emergencies. Do not fall into the trap of using the credit because it is available.
  4. Housing needs: Evaluate the size and location of your current home and how satisfactorily it will fulfill your retirement needs. If you plan to travel and be gone for extended periods of time, it may be that downsizing is an excellent alternative. Additionally, the equity from the current home may be sufficient to pay off or substantially reduce the mortgage on a smaller home. Particularly for those who live in colder climates, this may be an excellent time to consider a move to a warmer location or perhaps overseas where retirement funds may stretch further. If you and your spouse are interested in travel, and finances allow it, then begin planning where you would like to travel and in what manner. For those with a love of travel, either renting their home or selling it outright may be a feasible method both of financing their travels and alleviating the responsibility of home ownership.
  5. Health and medical: Consider taking out a long-term care policy if your current health insurance plan does not provide for that. Policy rates for long-term care escalate dramatically after age 65, so applying for a policy well-before that age can save you money overall.
  6. Life and death concerns: Although not a subject that people like to discuss, having a will and durable power of attorney for health care is very important to ensure that the disposition of your health care wishes, as well as your estate, is to your satisfaction.
  7. Investment management: Carefully examine your stock portfolio. Any high-risk investments might need to be moved to lower risk investments and cash funds might provide a better yield if moved to a long-term investment.
  8. The empty nest isn’t empty: Realistically evaluate the likelihood that you will have to provide at least some support for your adult children. Statistically, almost three-quarters of retirees state that they either have provided support, including housing and financial support, for their adult children or that they are doing so or expect to be doing so.