Discover the Non-financial Aspects of Retirement Planning

After working five days a week for most of your life, entering retirement can be a shock. Suddenly, you go from a set schedule to days free to do whatever you want. This transition may be difficult for many people who are dedicated and defined by their jobs.

For some, retirement can last decades, and no matter where you are in preparing for your golden years, it’s never too early to start planning for the different phases you will go through.

Planning For The Future

The first phase of your retirement starts long before you get there. This is where you begin putting a plan together, but everyone’s plan will differ slightly. Some may want to move into retirement part-time slowly, while others want to go all in. No matter how you approach retirement, having a solid plan will improve your chances of success.

If you’re married, you and your spouse may have different retirement goals, which is okay. Having those different goals known is important because this will tell you where you need to draw money from. If you want to do a lot of travel early in retirement, it might make sense to collect Social Security right away. If you have no plans to travel and want to focus on spending time with family and friends, you can wait until your full retirement age. 

A financial adviser will help you prepare a retirement plan to visualize your retirement, allowing you to see the true purpose of your savings.

Transitioning From Saving To Spending

Many people get nervous as they approach this stage. You’ve spent your entire life earning a paycheck and putting money away for retirement, and now it’s time to start drawing from those accounts. Worrying about how much money will be spent and if it will last is normal. 

Most retirees can expect to spend between 55% and 80% of what they spent during their working years. It’s advised to plan on spending at least 80% or more of what you were used to, especially if one of your goals is to travel extensively. It’s better to prepare for more and spend less than to be stuck spending much more than you were ready for.

There are a few phases of spending you will encounter during retirement. The first comes when you initially retire and spend considerable time and money doing things you have always wanted to do, like traveling, golfing, or going out with friends. Then, you transition into a slower spending phase where you don’t feel the need to do as much and can relax more.

Finally, retirees move into a phase of almost no spending. This could be when moving into a retirement home or doing less outside the house. While you may be spending less fun money, medical costs tend to go up at this time. Up to 15% of retirees’ income is spent on healthcare. Having a spending plan for your medical expenses will help ensure you are covered when that time comes.

What Is Your Purpose?

With the nine-to-five grind behind them, many individuals struggle with what they should do daily. They often get through the first few months of retirement or the retirement honeymoon phase but struggle with their purpose afterward. The feeling of needing to do something every day can be overwhelming.

To alleviate this concern, many pick up a part-time job to get them out of the house and give them a sense of belonging and social interaction. Others pick up a new hobby or side hustle. With either of these options, retirees can feel a sense of accomplishment and purpose again. They have somewhere to go and something to accomplish during their retirement days.

Are You Planning To Leave A Legacy?

While it’s not something anyone wants to think about, figuring out where you want your assets to go after you’re gone is essential. What do you want to leave for your family, and how do you want it divided up? Do you wish to give some of it to charity? You’ll want to ensure that all your assets get passed on efficiently and in the way you want. The most crucial step is making sure your wishes are known.

Another important consideration when leaving a legacy is being aware of the tax implications for yourself and to whom you are gifting that money. If you leave an IRA to a child or a grandchild, some rules specify how and when they can withdraw the funds. Distributions from those accounts could affect their tax situation, possibly pushing them into a higher income tax bracket.

If you want to donate to a charity or organization you are passionate about, find out what type of asset you can give that charity. Most organizations can take cash and stock donations. Larger organizations may be able to take other forms of assets, like real estate or artwork.

From the first stage of retirement to the last, you need a plan to make your money last. The first step in planning is to educate yourself. With the help of a financial adviser, you can determine the right strategy and retirement path.