9/18/2013 3:30 PM ET|
5 tests of your retirement readiness
There are lots of ways to plan for retirement, but they all (hopefully) lead to the same place -- happy, financially secure golden years. Here's how to know if you'll be ready.
Are you ready to retire? Some people spend years preparing for their second act, while others roll into retirement and take it one day at a time. Often retirees have some idea of what to expect, but are also prepared to live at a more realistic and enjoyable pace than is typically possible in the working world.
Deciding on the best age to begin collecting Social Security benefits is an important part of the retirement planning process. If you start collecting at the earliest possible age of 62, you will receive only 75% of what you would upon reaching full retirement age. But for each year between your full retirement age and age 70 that you delay receiving payments you can increase your benefit by 8%.
Is your relationship ready for retirement? While members of the working world, you and your partner have lived dual lives made up of work and life outside of work. Whatever the proportion of time you dedicated to each other, you have not yet experienced being together 24/7. Once you retire you will be together almost all the time. It can be helpful to communicate ahead of time about this significant change in your lifestyles. Having individual interests and supporting each other in these pursuits can allow for some “me time” to reflect and grow, which will only add to the quality of the relationship when you are together. Don’t expect things to just automatically work out if you have not even considered the real changes retirement life will introduce into your relationship.
Do you have a clear picture of the retirement you want to live? Try to imagine your perfect retirement scenario. Do you prefer a relaxing pace to life, or do you plan to chase after all the experiences you can? Consider whether you are happy with where you are living or might like a new location. Decide if you want to experiment with adventurous trips around the world or are fine with less exotic travel that leans more toward comfort than challenge. And make sure to compare your retirement vision with that of your partner. If you want to be ready to retire, ask the important questions to help better illuminate your path.
Do you have enough to keep you busy? The typical retirement will be a combination of doing things that you enjoy, finding pursuits that are meaningful and doing a bit of nothing as you relax and enjoy the freedom to do as you please. Establishing a balance is important. Retirement does not mean always doing something productive. But it is helpful to think about what will hold your interest and keep you engaged as you live your second act. Do you have enough hobbies and interests to help you avoid boredom? Can you entertain yourself, or do you need company from others?
Do you have the right retirement attitude? Once you have successfully arrived at retirement, the fun begins. But you will also experience the difficulties and frustrations that come with growing older. It is not easy to prepare for something that you have never before experienced. Try to face the challenges of aging with a positive outlook, and find innovative ways to cope with some of the inconveniences of growing older.
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I have been discussing retirement with a lot of people. In talking with individuals the one thing that stands out is everyone has a different opinion when they would like to retire. My younger brother and his friend are in the camp they would like to retire at sixty two. Both are tired of working and would like to spend more time with their families and doing things that have put off because of working.
We discussed the pitfalls of collecting Social Security at 62. We talked about increasing medical expense and the unexpected events. Both my brother and his friend have invested well and believe they can retire comfortably at an early age.
I have a co-worker who is approaching sixty nine. He is a very astute investor and could have comfortably retired years ago. He loves his job and is leery of retiring because he does not have any hobbies and feels he will be bored. He has a wife and two daughters and young grandchildren but he still feels the need to work because his work makes him happy.
I am in my late fifties. I enjoy my job and I plan on working full time for another ten years. Both sides in my family have been blessed with longevity and that is one reason why I plan on retiring later in life. I have been good with my finances. I have no debt and have a rainy day fund for unexpected events. I have a lot of hobbies and interests. When I do retire I want to live comfortably and spend more time with friends and family. I would plan on traveling more often and helping out my loved ones.
My plans could change and I have peace of mind knowing that I am on track to reach my retirement and investment goals. Each individual has their own retirement needs and the easiest way to achieve those needs is to have a plan, stay out of debt, start investing at an early age, and have a rainy day fund.
Check, Check, and check again.
Guess I never need to read a lame article on MSN money about retirement again.
How did I ever do it without you?
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