After a long career and saving for retirement, deciding when to retire is a big decision. And you need to make a plan long before you hand in your resignation letter.
You have to decide when you want to retire or where you want to live once you retire. Perhaps you’re not even sure what you’re going to do when you stop working. You might also have to consider how you can supplement your Social Security income.
But before any decisions about retirement overwhelm you, here are some things to consider to make sure you don’t regret your decision.
Figure out what you’ll do if you retire early
You may be planning to work until age 65. But what if your job is terminated or your company offers you a buy-out to retire early? Or changes in your personal life may make you want to retire early, such as moving closer to family or helping to care for a parent.
It’s a good idea to consider what you may do if you retire earlier than expected and have a backup plan ready.
Do you dream of retiring early? Take this quiz to see if it's possible.
Calculate Social Security payments at all ages
Remember, when you decide to start collecting your Social Security could affect how much you get each month. The longer you wait, the more money you can receive in a monthly payment.
The Social Security Administration offers a calculator to give you a better idea of what you can expect in monthly payments. You also may want to check with a financial planner to get a better idea of how your Social Security payments can fit in with your overall retirement portfolio.
Ease into retirement by working fewer hours
There may be a way to sort of retire rather than stop completely. Perhaps switching to a part-time or consulting role may be a way to avoid missing out on money as a retiree.
Plus, reducing the hours you work could help you see if you’re ready to retire or decide what you want to do with your time when you’re no longer working.
Create an estimated budget
It’s important to create a budget for your current living situation as well as an estimated budget for your future. Sit down and make some estimates for how much money you might need each month when you retire.
Take into account everyday expenses like utilities and groceries as well as one-time costs including travel or hobbies. An estimated retirement budget can give you a good idea of what to expect in the future and help you set goals now so you can retire the way you want.
Look into long-term care insurance
As you get older, your health care expenses are likely to go up, putting a pinch on your retirement savings. Instead, start looking into long-term care insurance now to see how it can help you, what expenses it covers, and what the premiums will be.
Long-term care such as a nursing home could get expensive quickly so having an insurance plan in place before you retire might help you cover expenses later.
Decide what you want to do when you retire
Retirement may sound like a great goal, but then what? It’s not too early to start thinking about what you want to do with your retirement years.
Perhaps you plan to travel or pick up a new hobby. Maybe you want to take college courses or volunteer in your community. Think about what a typical day or month may look like so you can start setting post-work goals that coincide with your personal and financial needs.
Get outside advice
It’s a good idea to meet with a financial planner and go over your retirement plan on a regular basis. As you get closer to retirement, you may want to rebalance your portfolio or put some money into less-risky investments.
Besides professional advice, think about talking to your family and friends about your retirement. Be honest with your kids about your retirement plans so they can help you if needed. Or talk to friends who may be contemplating retirement and compare ideas.
Find a way to stay involved
It can be easy to fall into isolation when you don’t have a job to go to or co-workers to talk to every day. Think about how you want to stay engaged after you retire to prevent you from getting bored or detached.
You may want to start looking now at community programs to get involved with or join groups that may appeal to your interests or hobbies. Having a good social network now may be able to help you transition into your retirement later.
Clean out the clutter
If you like being at work because it’s away from your mess at home, now may be a good time to address the mess at home. Think about selling things you don’t use anymore or throwing away broken items in your home.
It also may be a good time to let go of those boxes of donations you keep saying you’ll get rid of. Clearing the clutter now can help you start your retirement with a clean slate and a bright outlook.
Pay down your debt
You don’t want to have to set aside funds to pay down existing debt after you retire. Instead, try to find ways to pay down any debts you have now so you don’t carry them when you have a fixed income.
Examine your current budget and find ways you may be able to save money that can go toward clearing debt. You may also want to talk to a financial planner to get some advice on controlling your debt while still saving for retirement.
One of the most important things you can do to start your retirement planning process is create a budget with estimates for how much money you may need once you retire.
You may have to find ways to make extra money now so you have enough money saved for your eventual retirement.
Putting a plan in place years before your retirement may be the key to a satisfying life. And you’ll have a good roadmap to follow as you get closer to a post-work life.
More from FinanceBuzz:
Smart Asset Benefits
- Get matched with fiduciary financial advisors
- Advisors are vetted and certified fiduciaries
- Take the mystery out of retirement planning
- Their matching tool is free