Do This BEFORE you retire || 5 Important Considerations before You Retire
In this video & blog I want to discuss 5 factors you need to consider BEFORE retirement. Are you considering retirement or retiring in the next few years? Maybe you are doing retirement planning at 45, retirement planning at 50, retirement planning at 55, or retirement planning at 60, this retirement video & blog is for you!
5 Factors To Consider Before Retirement:
1. How much in Retirement Savings or Retirement Investments do you have saved for retirement?
When I first meet with a soon to be retired individual or family, I always ask the question, “How much do you have saved for retirement?” The answer I get most often is a round number ending in ish. For example: $600,000ish or $350,000ish saved for retirement. That is not a good answer. When you go on vacation, do you know how much the trip is going to cost before leaving? How about when you buy a car or house? Well, retirement and planning for retirement is so much more important than making a big purchase or going to Disney World. We are talking about 20-30 years of your life being retired. You need to know how much in retirement savings and retirement investments you have accumulated BEFORE you retire.
2. Where will your retirement income come from? Social Security, pension, or your retirement investments?
Now that you have calculated exactly how much you have saved for retirement, this is the next big question you need to answer before retiring. Where is your retirement income going to come from? Is it going to be social security benefits, pension payments, retirement savings and retirement investments or a combination of all 3? Do you have a retirement annuity with guaranteed income payments? Dividend stocks? What is your retirement income plan? Once you have identified what your retirement income sources are going to be, then you can figure out how long your retirement income streams are going to last (step 4).
3. What are the tax implications in retirement?
This retirement consideration should have a blog of its own. Taxes! Who likes paying taxes? Not me. Not you. Not any sane retiree. But let me give you the honest truth. You will pay more taxes in retirement than you did working. Did you just scoff at me. “Experts” push the opposite narrative. But with our national debt increasing dramatically, more retirees going on Medicare and Social Security every day, and the looming required minimum distribution at 72, taxes are a force of nature to be reckoned with in retirement. You need a tax retirement plan.
4. How long will my retirement income last or retirement income streams last?
This is why you need to know how much retirement investments and retirement savings you have accumulated before retiring. How long is all that hard earned retirement money going to last? If you are using your retirement investments to live on and pay expenses in retirement, how long will they last. The 4% rule use to be the way to gauge your retirement income, but now because of longevity that rule has been updated to 2-2.5%. Do the math. If you have $1,000,000, 2% of that is $20,000.
5. Have you accounted for Big Expenses in Retirement?
Healthcare premiums, home renovations, Long term care, dependent childcare; these are all major expenses that need to be accounted for before retirement. Make sure when you put together your retirement budget, you are including everything you’ll be spending money on.
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