By Michael J. McNamara
There are a lot of moving pieces to a successful retirement. You need to check all the boxes, and hopefully well before you actually retire. What follows will get you thinking.
You need to pick a firm day, month and year for retirement. Some spouses may have different dates. Once done, now you have a goal.
What exactly are you going to do in retirement? What does a day in retirement look like? Spouses often have very different ideas of what retired life should look like. Serious discussions/negotiations on this subject are in order. Compromises may need to be made in the interest of marital harmony.
What is your housing plan? Hopefully you are debt free on your home at retirement. This is a biggie! Are staying put in your home and doing a little remodeling? Are you selling and downsizing? (hint, downsizing in space is good, but downsizing in price is not likely to happen.) Where exactly will you be living? If you are fortunate to own two homes, what is the plan?
When are you planning to take Social Security? And why?
If you have a pension, which pension option are you going to take? There are several choices. If you knew when you and your spouse were going to die, this would be easy.
Are your investments appropriately allocated for retirement, and how much income per year do you need from them? Is this realistic?
Do you have a big, comfortable Emergency Reserves Account set aside for retirement that you hopefully will never need to touch?
Are you planning to do some part-time work in retirement by choice or need? If out of need, what will you do and how much do you need to earn? And how long will you do this? If you need to work in retirement, what is the back-up plan if you are not able to work for as long as you planned?
Have you carefully analyzed your budget needs in retirement? Did you build in sufficient funds for “fun” and gifts or help to kids and grandkids? How often and how many cars do you plan to drive in retirement, and have you budgeted properly for this (hint — most folks significantly under-estimate their transportation needs in retirement).
Do you plan on leaving something to your children or heirs? If so, how much or what, and does your budget reflect this? Are you helping a child or two now, and does that come out of their inheritance or not?
Do you have too much, too little or just enough life insurance in retirement?
What are you doing about the risk and possible cost of long-term care at home or in a nursing home?
Do you have an updated will, powers of attorney, health care proxy and living will?
What do you know about trusts and whether you need one?
Does the math say that you can comfortably retire? Have you sat down with a Certified Financial Planner Practitioner and developed a comprehensive, written financial plan for retirement? If not, are you comfortable crunching all of these numbers and doing all this research and analysis yourself? Retirement is likely the biggest financial decision in your life, and you do not want any surprises in retirement.
Good luck and happy retirement!
Michael J. McNamara, Ph.D., CFP, certified financial planner. Disclaimer: Any financial advice in this article is intended to be generic in nature. Readers should consult with their own financial advisors before implementing any advice or suggestions above.