For kids, teens, and college students, summer break often represents freedom from schedules, responsibilities, and all those other drains on your time. Retirement actually can provide a similar level of freedom, but only if you've adequately prepared, planned, and saved. Below, we discuss three ways that planning ahead for your retirement can be like scheduling your summer.
Deciding What to Do
After spending decades at a 9-to-5, you may struggle to find ways to fill your time after retirement. Just like summer break, a couple of weeks of well-deserved decompression may turn into boredom.
It's important to have a plan to transition into retirement. Whether this means having a list of vacation destinations, a hobby to turn to, or an organization to volunteer with, giving yourself some options can help you remain active and engaged instead of simply vegetating.
Deciding Where to Go
Many new retirees spend a lot of time traveling now that they no longer need to worry about coming back to a pile of work or rationing a limited number of vacation days. As you spend time traveling during your working years, take note of the destinations you'd like to return to.
Planning for retirement in general can look a lot like planning a vacation: you'll need a budget, a destination, a timeline, and a Plan B. More than just longer vacations, retirement may also mean traveling to a new home – whether downsizing, moving closer to family, or even heading to a senior living community.
When considering next steps, especially if debating an interstate move, take into account factors like:
- The way your state treats and taxes retirement income
- Whether the setup of your home allows you to "age in place"
- Access to amenities
- Access to necessities (like grocery stores and hospitals)
- Transportation options
- Cost of living
By keeping these factors in mind, you'll be able to find the best fit for your lifestyle now and in the future.
Deciding How to Pay For It
How do you afford your current lifestyle? What expenses do you expect to lose in retirement – and which ones might you gain?
Just like planning a vacation, planning how you'll fund your retirement can be an intricate process with many moving parts. Having a financial professional at your side can help streamline matters.
Your financial professional will probably help you work backward to create your retirement financial plan. This planning can begin by evaluating how much your retirement lifestyle will cost, then figuring out how much income you'll need to afford it. By looking at sources such as 401(k), IRA savings, a pension, Social Security, and taxable savings, your financial professional will scour all your potential areas of income and help you figure out the most tax-efficient way to fund your retirement.
Retirement planning can take time and effort – but just as you wouldn't embark on the vacation of a lifetime without doing a bit of preliminary research, you also don't want to leap into retirement without a plan.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
This article was prepared by WriterAccess.
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