Part 8 – Financial Readiness for Retirement
Wishful thinking is not a plan! Studies have suggested that the average baby boomer who is nearing or who has retired wishes they had saved more for that major period in life that follows a fulltime career. A 2018 TransAmerica Retirement Studies Survey found that 30% of retirees found they had not saved enough for retirement. In reality, retirement living can be far more expensive than most people realize. Health care costs alone can average $285,000 per couple during their retirement years. All of us need to consider our financial readiness for retirement.
According to a NerdWallet Survey* reported in a recent CNBC article, the average age when people are retiring is closer to 59 rather than full Social Security age. This doesn’t mean that most people are preparing to retire earlier, but often people are either forced out of a job, lose their job, or need to quite because of an illness. The big, million-dollar question is this: Are you financially prepared to live another 30 or 40 years?
*It should be noted that other studies suggest different average ages for retirement.
Reviewing Your Financial Situation
Whether you are already retired or are still in the planning stages, it is important to periodically review your financial plans. Hopefully, financial planning has been something you’ve been working on for years.
Nothing shared on this website is a substitute for professional advice you will receive from a qualified financial advisor. Speak with a qualified professional financial advisor if you need financial advice.
The following is just a partial checklist for your consideration:
___Do you know how much money you currently spend each month? (I personally created a spreadsheet and tracked every cent I spent for an entire year before I actually retired. By doing this, I could identify areas where I could cut costs, if needed.)
___Do you have an idea of how much money you will need to set aside for emergencies? (Emergencies could include unexpected auto expenses, unexpected home repairs, family emergencies, emergency trips, etc.)
___Have you paid off your debts or do you have a plan to do so before retiring? (This includes credit card debts, car loans, and mortgages.)
___Do you have any idea how long you could potentially live? (I have linked some life expectancy calculators on my site. Based on your lifestyle, you can estimate how long you might live. You might also find these calculators motivating because you can see how small lifestyle adjustments could add years to your life.)
___Do you know how much passive income you will be counting on after retirement? (This could include Social Security, annuities, investment returns, and possibly pension income.)
___Are you anticipating other passive income such as royalties from creative works, rental income, etc.?
___Do you plan to work at least part-time after retirement? (While many people think they will work part-time during retirement, this isn’t always possible for a number of reasons including job availability and age discrimination.)
___ Are you considering being your own boss after retirement by starting a business? (If so, what do you anticipate the costs will be to start a business? Have you done any research on the type of business that interests you and the need for the products or services such a business could provide? Have you talked with appropriate professionals about your plans? Have you talked with advisors at a Small Business Development Center about how to get started with your plans?)
___ Are you currently working with a professional financial advisor about your retirement plans or do you intend to do so?
If you missed any of our previous discussions on preparing for your best life after leaving your career, you can find them here:
Part 1: The Gift of Time – How will You Use it?
Part 2: Planning for the Gift of Time
Part 3: What Really Matters?
Part 4: Freedom to Choose Your Best Life
Part 5: Social Connections Matter
Part 6: Living Our Best Lives
Week 7 – Maintaining Good Health Should Be a Priority