Is 2020 the year you're going to retire? Or the year you're going to really start thinking seriously about retiring, perhaps within the next five or so years?
While we're still early in the year (Although, where did January go??), I want to go over a few things you'll need to think about as you prepare to take that plunge and ditch your day job. Or night job. Or whatever brings you income.
First, I want you to think long and honestly about what you want your retirement to look like. It's easy to get caught up in the romanticized (and somewhat antiquated) notion of retirement as walking out the office door and into a life of leisure - golf, books, fishing, buying a big RV, etc. - but is that truly what you want? Take a look at your current lifestyle and ask yourself how closely you want your retirement lifestyle to match your status quo. If you're a person who moves at a more leisurely pace through life, are you really going to start volunteering at 14 different organizations in retirement? Conversely, if you're like a shark who literally dies when it stops moving, are you sure you're going to sleep in and relax all day? Maybe you're more than ready for a drastic change either way. Just give it some thought.
Our default notion of retirement originated when times were very different - if it was ever one-size-(or retirement age)-fits-all, it certainly isn't now. Sending long-time workers off with a pension and a gold watch to make way for younger workers created an artificial retirement age that many of us still cling to, even if scaling back our working lives at that age doesn't really make sense anymore. It's easy to bemoan the loss of pensions and having to buck up and actually save for ourselves, but the reality is also that this can bring a lot more freedom - freedom to change jobs if we want, freedom to keep working if we want, freedom to design our own vision of our golden years.
Americans are also living longer than we did back when the traditional notion of retirement came to be. This means that, not only do we have to plan financially for two or three decades of post-working life, we also have to figure out how we're going to fill all that extra time.
If you truly envision golfing every morning followed by bourbon and cigars every night, that's great. Let's get planning. But if the idea of all that downtime puts a knot in your stomach (this is my reaction, by the way), and you think you might want to keep working, or find any number of other ways to stay busy, that's valid too. It doesn't have to look the way it's always looked - or the way you thought it would look.
Now that you've thought out (or are continuing to ponder) what you might want your retirement to look and feel like, let's talk about a few of the nuts and bolts.
How is your cash flow? Do you have the assets to actually fund that lifestyle vision? Our team can help you work out a plan, a budget, and timeline, so if retirement is starting to sit at the top of your mind, let us know sooner rather than later.
Next, where will you live? I've seen this decision go every which way. Some couples immediately downsize to make home maintenance a little easier. I've also seen retirees upsize so extended family has a place to gather. I've seen people sell everything and live in an RV for a year. I've seen others choose over-55 neighborhoods that offer progressive levels of care and assistance as people age. Some people want to start over in a new state or city, while others have well established social lives where they are, and want to stay put. There are as many answers to this question as there are retirees. Just make sure you know what's right for you and yours.
If you're under 65, you'll have to factor in health insurance. I don't have to tell anyone that medical costs are a huge concern. Keep yourself as healthy as possible, and make sure you have coverage available until Medicare kicks in.
Speaking of government benefits, what's your Social Security plan? Whether you choose to take it early or wait until you're eligible for full benefits, please, let us help create a plan for you to help maximize your Social Security. It's not always as simple as retiring and waiting for a monthly check to arrive.
This may sound obvious, but trust me - I have to say this over and over again: Talk to your spouse or significant other about all of these thoughts and feelings. Are you going to retire at the same time? How will you avoid tripping over each other now that you're both always home? Many folks also have a romanticized vision of retirement as a couple, but cruises and dinner parties only take up a fraction of your time if they happen at all. The day-to-day mundane reality rarely looks romantic. Just make sure you're both prepared for a lot more together time, and maybe have some individual hobbies or activities lined up.
Whatever your plans and goals are for the coming year and beyond, we at Family Financial Partners are thrilled to be taking this journey with you. Let us know what's on your mind so we can help you plan. And if you're not currently working with us, please, give us a call and let's chat. First meetings are always free. We'll keep the coffee hot.