12/16/2013 4:15 PM ET|
How to test-drive your retirement
Once you're finished working, things are going to be ... different. It might be a good idea to dip your toe in the retirement financial waters before you retire.
If you're like most people, you'll be working with a smaller budget and making other notable changes when you retire. That's why most people benefit from a retirement test drive. It paves the way for a smoother transition to retirement by helping prepare you both mentally and financially for the multitude of big changes you'll face when you really do retire.
Here's a test-drive checklist:
Adopt your retiree budget
This is the most important checklist item. First, estimate what your monthly retirement income may be, based on your retirement nest egg and timeline to retirement. Next, establish a spending budget to fit your estimated retirement income. And finally, try it out.
Spending a year or two living on your retirement budget before you actually have to is a good way to see whether it works – if it doesn't, you'll need to re-do the budget or delay retirement so you can save a little more. It'll be easier to keep working longer than it will be trying to re-enter the workforce after retirement. As an added bonus, chances are good you'll have extra money each month during this retirement budget test drive; throw that straight into your nest egg for an added boost.
Go ahead and downsize if that's in your plans
Even if you don't move to your retirement apartment, condo or house, consider moving to something similar if you can – perhaps you can rent for a couple of years. This is your chance to ensure you're OK with downsizing before it's too late. Once you've retired, it will be difficult to upsize on a limited budget. You can always delay retirement or save extra money to pick up any slack so you can find the perfect size for your retirement digs.
Transfer your transportation
A lot of retirees plan to save money by using mass transit, walking, bicycling or downgrading to an inexpensive car. Spend a few years figuring out whether you can live with this money-saving transit option. If you hate it, plan accordingly.
Explore your intended retirement hobbies and activities now
Planning to take up golf? Photography? Woodworking? Take lessons now to see if you like it. You'll spend money on necessary supplies and gear while you're still working, which means you'll spend your working dollars rather than your retirement dollars.
Get involved with your new location
Thinking of moving to a new city or neighborhood? Making a change from rural to urban or urban to suburban? It's probably not feasible to move there during your retirement test drive, but depending on how far away it is, you may be able to join a community organization in your desired area. Visit frequently and participate in the community so you can meet people. Figure out whether you really want to make that move.
The retirement test drive is your opportunity to position both you and your budget to thrive during retirement. In addition to being a great way to test your expectations and your preparedness, it's also a means of easing into retirement and reducing the shock that could come from making so many changes at once.
More from U.S. News & World Report:
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And beware of politicians!
Obama has already stated that too many people have too much money in their IRA's/401K's. His own words "You don't need $3 million to retire comfortably". He proposed a tax on all dollars over a certain amount.
How much I need to retire is my choice, not yours Mr. Resident.
We are being dragged down to a 3rd world country by people who are too lazy or stupid to take care of themselves and who feel entitled to what those who have worked for what they have now.
Quit blowing your money on the latest electronic gadgets, which by the way, do nothing but waste money on products built overseas rather than purchasing goods built within the U.S. which would help our economy.
Try and get an education in a field you would like to work in, and take care of yourself. You'll be happier than taking handouts all your life, if you have any character at all.
we sold or business after Obama took office, he's making it too difficult for small business to survive and now with Obamacare it's going to be the end of a lot of small companies. Obama hates successful business people it's quite obvious and he doesn't have a clue to operating a business or our country.
retired and life is good !
Here I go again with the best advice you can ever have on retiring for free.
1. If you live in a tax hell like I do, NY state, get rid of you're house ASAP. One of the ways the state, county and city government confiscate more and more of you're money is via you're home. No more property, county, water, sewer, light, and of course the worse of the worse school taxes. Quick math if you're taxes go up an average of 10% a year, in 7 years they double and in 14 they double again. You're pension is fixed so is SS by and large so can you and do you want to keep supporting the lack of public service employees till you die? Not me sold the house 4 years ago, now rent and I know part of my rent goes to pay the taxes. But unlike the government my landlady has not increased my rent in 4 years. Trying telling the teachers union they need to hold the line on their budget and they will laugh like hell and shake you down for some more of you're hard earned cash. Plus now you have the mobility to move on, areas that look good to you 20 years ago, can get to expense or over run with well you know.
Good luck and enjoy you're retirement.
If you were smart enough to put money in the market when Obama took office you doubled
your money.If you were too stupid to believe in Obama is time for bitterness,denial,jeolousy
and dreaming up phony scandals about Obama.BOO HOO HOO.
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The Fed's latest statement confirms that it won't be coming to the rescue of depositors soon, but these institutions are worth following anyway.