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For many of us, we look forward to retirement as a time when we’ll be able to enjoy a leisurely lifestyle pursuing all the special interests we never had the time (or money) for in our earlier years. One of the best ways you can ensure this dream comes true is by building a retirement plan now, even if your retirement is still decades away. In fact, financial experts recommend building a retirement plan as early as possible, starting by asking yourself a few simple questions to get you thinking about what you want your retirement to look like.
1. What Do I Want My Retirement to Look Like?
For some people, the perfect retirement involves buying a boat and spending their days on the water, while others dream of afternoons spent on the greens or in the garden. Some people want to retire to a warmer climate, and others a big city. Thinking now about what you want your future to look like can help you formulate a plan for the steps you’ll need to take to get from here to there. As you envision your retirement, ask yourself some of the following questions:
- Do I want to spend my retirement traveling? If so, how often and where?
- Where do I want to live when I’m retired? Close to my children or in a more tropical location?
- What hobbies do I want to pursue when I’m retired?
- What kind of home do I want to have when I retire? Will I downsize or remodel to make my home more accommodating as I age?
As you mull these questions over, you also need to consider the following questions to get a full understanding of your financial “health.”
- Am I more frugal or more liberal when it comes to spending and saving?
- Do I want to continue working after I’ve retired? If so, how much and in what profession?
- What is my current lifestyle? Will I want to be able to live the same lifestyle after retirement?
Everyone has unique ideas when it comes to retirement. There are no wrong answers to these questions. However, it is important to note that lifestyle is a critical factor when it comes to preparing a plan that will help you meet your retirement goals.
2. What Assets Do I Have?
Planning for retirement involves balancing your assets to be able to live comfortably and cover any expenses you may have. In order to do this, you will need a thorough understanding of your financial health, including an honest assessment of the assets you currently have and hope to build as you work toward retirement. These assets may include:
- 401ks and IRAs
- Investments (Stocks, mutual funds, annuities, etc.)
- Savings Accounts (Money Markets, CDs, etc.)
- Checking accounts
In addition to these, be sure to include among your list of assets any real property or other items of significant value that you own.
If you will qualify for social security benefits (or have another retirement plan or pension with your employer), you will also want to consider this income among your assets. One big question people often ask is when they should begin drawing on their social security or pension plan. While the answer will vary from person to person, generally speaking, the longer you wait to draw benefits, the greater the monthly benefit will be.
3. What Can I Do To Save More?
Growing your assets is one of the most important aspects of working toward retirement. But everybody knows that saving money is easier said than done, especially when juggling the expenses of raising a family. With some discipline and dedication, building up your savings bit by bit can help make your retirement dreams a reality that much quicker. There are two ways to save more money — either decrease your spending or increase your income. Adjusting spending habits now can allow you to live more comfortably in the future. In addition, cutting expenses now can also be beneficial for creating a more pared down budget for retirement.
4. How Can an Estate Plan Help Me Prepare for Retirement?
People often create estate plans to ensure their assets are distributed according to their wishes after their death. However, creating an estate plan to properly house your assets can also help you protect your assets from creditors before and during retirement, giving you peace of mind that the bottom won’t fall out of your retirement due to unforeseen circumstances.
Your comprehensive estate plan should also involve naming financial and health care powers of attorney who can manage your affairs and make medical decisions for you in the event that you become incapacitated. If you have young children, this estate plan can also include nominations for guardian of minor children.
5. How is My Health?
Personal health plays a significant role when planning for retirement. To get a thorough understanding of your current health, you can start by ensuring you are up to date on all annual checkups and screenings. Coupled with an honest assessment of your health, this can help you better plan for retirement.
- Do I have potentially costly health issues?
- Will my health interfere with my ability to have additional income once I retire?
- Will my health someday affect my ability to live independently?
- How will my health impact my quality of life?
- Will my health allow for the retirement lifestyle I want?
With health affecting so many aspects of retirement, it may be necessary to reassess and improve your current health habits to improve and live out your best retirement life.
6. How Can I Plan for the Unexpected in My Retirement?
While we can plan for the retirement of our dreams, it is not guaranteed that it will become a reality. Unforeseen life events and adverse health problems may arise before or during retirement. These events cause financial strain and can throw off our vision or disrupt our retirement plan. Our loved ones may also be affected by unforeseen circumstances, so it is important to involve them when planning for the worst case. A contingency plan that includes legal and financial considerations can significantly minimize potential problems.
Creating a retirement plan specific to your needs is essential as we age. If planning seems a bit overwhelming, start with the six questions listed above. Then consider seeking the guidance of an attorney and financial advisor to ensure you are informed in all your decision-making and planning.
At Pierce Legal, we get to know each of our clients, gaining a meaningful understanding of and relationship with you that allows us to create a thorough estate planning strategy that will satisfy all of your planning goals and needs. Our practice provides professional legal advice and guidance focused in the areas of asset protection through proper estate planning, business services, and real estate assistance. Contact us today to schedule a consultation at (330) 588-6115.