3 Questions to Ask Yourself When Planning for Retirement in 2020.

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3 Questions to Ask Yourself When Planning for Retirement in 2020.

Aging resiliently in these uniquely challenging times requires planning ahead for the “what if’s” of retirement and not shying away from difficult conversations.

Recent money lessons from the pandemic are showing us the power of financial planning. If you’re gearing up for retirement, it’s important to build a road map for your lifestyle and finances during this new chapter.

One way to get an idea of where you stand — and make sure you can get where you want to be — is to ask yourself a series of questions about retirement. Your answers to the following three questions can help you make a more realistic road map to the kind of life you want to live.

1. What’s Your Ideal Vision?

How do you envision your perfect retirement? Since you may be spending 30+ years in retirement, write down what you’d like to do in that time. Maybe it involves volunteering and part-time work; maybe it involves travel or moving to a second home or another activity that will require a significant cash reserve.

Lifestyle questions in retirement cover a lot of ground, and many retirees look at this as an opportunity to “revamp” parts of their pre-retiree lifestyle they may not have enjoyed. Planning your retirement vision should include:

  • Where you want to live: You need to decide what’s best for you and your spouse or partner before retirement – whether that means downsizing to a home closer to family, moving to a new region or state where you’ve always wanted to live, or making adjustments to your current home to make it more retirement-friendly.
  • What you want to do every day: Determining whether you want to volunteer, spend time with family and friends, pick up a new hobby, or get involved with a local organization or group can help you to start imagining your lifestyle in retirement with some more clear-cut structure.
  • If you want to work: Whether you want to continue at your current job, start consulting or freelancing, or start part-time work in a new field, working during retirement comes with several financial and emotional benefits.

2. Can You Afford this Vision?

You might be surprised to discover that many people have no idea how much money they have saved for retirement. Without knowing where you stand right now, there’s no way to move forward.

After understanding how much you expect to spend in retirement, it’s time to figure out how to get you there.

Pension plans are becoming close to non-existent, and Social Security will likely not provide enough income for most retirees to live.That means you’ll need other sources of cash inflows, such as investments or your 401(k).

As a general rule of thumb, it may be prudent to spend after-tax investment assets before tapping into 401(k) and individual retirement account (IRA) assets. This generally allows retirement accounts to continue to grow tax-deferred (check out our SMART Retirement plan to target your lowest tax rate here).

Don’t forget, too, that you can develop other income sources now to prepare for the future. Start a business, build a rental company, or look for other ways to generate revenue. The more diverse your income, the more likely you are to thrive in retirement, so consider how to grow that income now.

Of course no one solution works for everyone. It is important to consult with your financial advisor to determine what strategy works for you and your definition of retirement.

3. Do you have a Long-Term Financial Plan?

One thing we keep hearing regarding the COVID-19 pandemic is why weren’t we better prepared for it? The same reasoning can be applied to our financial lives and why creating a retirement plan isn’t a one-and-done activity. Many pre-retirees make the mistake of not planning for healthcare costs, relying on Social Security, having no emergency fund, not correctly projecting outgoing expenses and much more.

In order to have a stress-free retirement, you need a fool-proof plan. Your financial plan going into retirement should be created with the idea that it needs to support you through the best of times and the worst. This might mean creating a financial contingency plan for worst-case-scenarios, or regularly “stress testing” your retirement plan to make sure it stands up under the pressure of potential economic downturns.

Get the Help you Need

Some of the above questions are uncomfortable, and the answers can be even more uncomfortable. However, it’s up to you to ask these questions. When you’re clear about where you stand and where you hope to end up, it’s easier to chart a course that will allow you to realistically reach your goals.

Do you feel overwhelmed at the prospect of building the right retirement plan for you? We’re happy to walk through your current retirement strategy and help you to make adjustments that will set you up for long-term success throughout retirement.

Simply get in touch with us by calling 586-286-5820 or set up a complimentary strategy session on our website here today.