Questions. Retirement is chockful of questions and knowing the right ones to ask is half the battle. Also of importance: knowing where to turn, whom to trust, and when to act (and how). It can be daunting, to say the least.
So, what’s a person to do?
For starters, don’t go it alone. Start getting answers to any retirement questions you have. All too often I hear stories of folks who tried to manage everything on their own but subsequently missed one or two things that they never saw coming, and… well, you know the rest. There’s a reason folks like me have a job. You shouldn’t have to make planning for retirement yours.
Before assuming that you’ve covered every base for your future, consider and get answers to these 7 retirement questions:
1. How Much Do You Have Left in the Tank?
As I stated earlier, many Americans saw their lives get upended, or at least slightly affected by the pandemic. For example, some of my clients in the “pre-pandemic” era had only three or four more years of work left until retirement. But then suddenly, things changed. They witnessed their co-workers getting laid off (or perhaps they were laid off) and their workplace dynamic changed, leaving them feeling less and less excited about working anymore.
If this was (or still is) you, it’s important to know all your options. For example, if you want to retire now, in the “new normal,” one option to consider is supplementing your social security with a part-time job in retirement. Or maybe you have enough capital to create income and live comfortably. On the flip side, maybe you like that you can now do your job from home, so you decide to put retirement on hold. The point is, you have options, so make sure you find someone that is trained to show you all of them and choose the one that suits you best.
2. What Are You Going to Do in Retirement?
Seems like one of the simplest retirement questions, yet many people don’t have a plan for what they are going to do once they retire. We spend our whole adult lives working at our jobs, and, more often than not, our careers become our identity. Sound familiar? If so, ask yourself, “What will my life look like without work? What will fill this new space of time on my calendar; how can I best spend my time?”
It’s difficult for some people to picture this world – a place where they are no longer responsible for deadlines, having others count on them, or answering to a boss – yet necessary to ponder, and then plan for. And as idyllic as this might sound, it’s what confounds many new retirees. They get so caught up in leaving their jobs that they forget to think about what they will be doing with their time. This is one of the reasons that I tell my clients to retire “to” something rather than “from” something. Having something to look forward to, that you can regularly do – as you wish – is important.
- spend more time with grandchildren
- live the winter months in Florida, or summers down at the Cape
- turning a hobby into a business
The beauty of retirement is that you have an opportunity to fully immerse yourself in what you love doing – just make sure you know what that will be.
3. Do You Have Enough Money to Do It?
Now that you’ve answered the retirement questions of when you want to retire and what you will do – what’s next?
You are going to need money to do all of these things, so it’s important to make sure you have enough. When our team puts together financial strategies with our clients, we make it possible for them to sustain the lifestyle they desire for the rest of their lives.
And while it’s easy to fall into the trap of dreaming about European ski trips or snow-birding the summers away in Florida, there are also other important factors to consider that could affect the good times that lie ahead. It’s our job to show our clients the full picture – the good and the bad – so there are no big surprises.
4. How Will You Pay for Healthcare?
Planning for your health in retirement is one of the most critical, though not the most enjoyable, retirement questions to address. Retirement goes hand-in-hand with our later years, which inevitably means changes in our health. This brings us to two areas to consider:
If you’re not 65 yet and want to retire, you will likely have to go on COBRA or get your own private healthcare plan until you are eligible for Medicare, which can cost a ton. Your income will likely be lower without that steady paycheck coming in, so it’s paramount to know the costs that lie ahead. Will you be able to afford ~$1,000 a month for health insurance? To some, this is most of their social security check. Seek out a professional that knows the facts before you make the leap.
Even worse, what if you end up with a long-term sickness? Sorry to be so “doom and gloom,” but this is a common pitfall that affects so many and deserves attention. Here’s a statistic to consider: about 70% of people over the age of 65 will need “some” form of long-term care. Medicare was never intended to cover long-term care, so it’s important to understand that it has its limitations. Now, I’m not telling you to go out and purchase Long Term Care insurance today – that wouldn’t be prudent. Everyone’s situation is different and there is no such thing as a one-size-fits-all plan. That’s why it is important to seek the advice of a professional to weigh your options.
5. What Liabilities Will You Have (Not Have)?
Another change that happens when people retire is their debt. Most of us pay a mortgage for so long that we forget it has an end date. This fixed cost has become such a part of our lives that we just assume it will be there forever. Luckily, this is not a reality. So, for those who will be making that final mortgage payment (either before or during retirement), remember to scratch that big bill off your list of monthly expenses.
Other sources of newfound income can be from things like child support or alimony payments that will no longer be a liability in retirement. What will you do with this money? Will you squirrel it away in a rainy-day fund? Pay down your credit card? Take a trip? The possibilities are endless and you have some decisions to make – just make sure you seek professional advice to be sure you’re not missing something.
6. Where Will You Go?
Thinking of escaping the cold New England winters once you retire? If so, it’s important to know what expenses await you if you move to a new state in retirement. For example, Florida and Texas have no income tax but carry above-average sales and property taxes. And Tennessee, another income tax-free state, just eliminated the tax on unearned income at the beginning of this year. Where do they make it up? Beer tax, of course! So, if you enjoy the suds, Tennessee might not be for you.
Bottom line, every state has its own quirky rules, regulations, and costs of living that bring about important considerations for a retiree – and they can change quickly. Having someone who can analyze your real estate, healthcare, taxes, and other costs in your new home state is an invaluable resource to have.
7. What is Your Social Security Plan?
Most people know the basics about social security, but few know all their options. There is no such thing as an “optimal age” for everyone to start taking their benefits because every situation is unique. Some believe that waiting until their full retirement age is the best move since their monthly check will be at its highest. Others prefer to start at 62, accepting a smaller payment for a longer period. But few have a plan that works best for them, but it doesn’t have to be that way.
When considering your social security benefits, ask yourself these questions first:
- Are you still going to be working?
- What is your life expectancy? Will you have health insurance?
- Are you eligible for benefits on someone else’s record?
- Do you have the income to support you if you delay your benefits?
- Will other family members qualify for benefits on your record?
It seems that everyone has them, especially when it comes to retirement, but they’re not always the right ones. Make sure you are getting your answers from a qualified source. And don’t panic, whether retirement is far down the road, or you are several years in, there is always a way to rebalance your strategy and get back on track. And if you don’t have a running dialogue with your current retirement specialist, it might be time to find someone willing to put in the extra effort, so you don’t have to.
Rowlette and Associates, LLC DBA: South Shore Retirement Services – an affiliated company – is an independent financial services firm offering both insurance and investment services. Investment advisory services are offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Rowlette and Associates, LLC DBA: South Shore Retirement Services not affiliated companies. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. 1235726 – 03/22