Retirement is often met with apprehension but everyone has to retire at some point in their lives and the process of doing so has indeed altered over the last few years. It is always best to start saving for retirement early in order to build up interest. Given the current economic climate you will earn as much by saving for ten years between the ages of 25-35 and ‘sitting on it’ as you would by saving at the same rate from 35-retiring as it would be earning for longer. Whether you are just starting to enter the work force or rounding the corner towards the end of it, you will want to consider the following factors before you retire.
How Do You Want to Spend Your Retirement?
In such times it’s good to plan anything and retirement is no exception. It’s good to have an idea of where you would like to go and what you would like to do when you retire. Once you have an idea in place, put together a financial plan to support your retirement dreams. It’s easier to achieve your target if you have you have one and adhere to it, so that you will be able to live a quality of life without being financially strapped. It is always best to pay off any debts you may have before entering retirement. However in today’s economic climate that may be extremely difficult, so doing our utmost to minimise them where possible is vital. You then need to plan your future finances by putting together a budget for your future & retirement living expenses and bills. Make sure to consider a rise in the cost of living, gifts, emergency-funds and taxes. It might be wise to consult with a financial planner to ensure you are prepared.
Your mortgage and Estate Planning
It may be a difficult subject to think about but it’s necessary to have this in order to protect your assets. Review your estate plan and update your will. It’s extremely helpful to know who will get what when you leave this earth. If you don’t have a will or trust, have an attorney draw one up while you are still alive. This makes it easier on those you leave behind.
When thinking of retiring, take a look at your mortgage situation. Are you still paying off your home? Are you going to sell? Do you need to refinance? Before you retire is a great time to look at your financing needs as it may be more difficult to obtain a loan once you’re retired. If, however, you are lucky enough to own your own home then your options are plenty. You may wish to consider downsizing or moving to a holiday home and cashing in on the difference. Another option, if the house has been a mainstay in your life full, of memories and you don’t wish to move out of it, is to consider equity release, again you may wish to see a financial planner before doing this.
Physical and Mental Health
Another factor to consider before you retire is your health. Being physically and mentally sound will be detrimental in how you experience your golden years. Make sure to exercise, eat right and find mentally stimulating activities to do every day. Health care costs are on the rise and it could be financially debilitating if you don’t have a reserve in place for emergencies. It’s important to make sure you have health care costs factored into your monthly budget when you retire.
Retirement should be an exciting time in your life, yes it is a big transition and a big change in your lifestyle, but you’ve earned it. It’s a way to start another chapter and find creative things to do with your time. Some people travel, go back to school and golf. Whatever you do, make sure you are financially prepared to enjoy your retirement with peace of mind.
This article was written by Jem Mosley. He is enthusiastic about both health and finance issues and has focused on equity release as a specific area given the economic climate. You can follow Jem now on twitter at @writerjem to find out more.