Thursday, June 29, 2017

Questions to ask in your 50's about Retirement Planning

Retirement planning is not just about finding the money to live. That is important, but as my mother told me, you really don’t need as much money in retirement as they tell you. I believed her. Before settling into a new life as a retiree, there are the practical realities, of course: money, location, health care. Once those are arranged, however, what comes next?

One of the most important areas to plan for when you are planning for retirement is the answer to this question: Do you have a reason to get up in the morning? In addition to this important question, here are some others that you should consider as you move toward a viable retirement plan. The questions are mostly short but hardly simple. There are many others and the hard part is that no one can answer for you. Here are a few:
Purpose Questions:
               What do I want to do with my time now?
               What will get me out of bed each morning?
               Do you have special interests and hobbies? If so, have you included these costs in your monthly expenses?
               What gives me pleasure?
               What do I most care about?
               Can I use my career experience in new ways now?
               What's been missing from my life?
               What have I always dreamed about doing?
               What gives me a sense of purpose?
               What and who are most important to me?
               What does an ideal day look like?
Questions about where you will live
               Do you know the date you plan to retire?
               Where do you plan on living?
               Are you staying in your home?
               Will you be downsizing?
Money Questions
·       Do you have a handle on your monthly living expenses? Can you list them exactly?
·       Do you have an emergency fund?
o   If not what amount of money will you need to set aside to build your cash emergency fund?
·       What is the amount of Social Security benefit you will be receiving?
o   When will it start?
·       What is the total amount of all your retirement savings?
·       Do you know what required minimum distributions are?
·       Do you realise that your investment risk profile needs to be re-evaluated as a retiree?
·       Do you plan on earning income during your early retirement years? If so how will you do this by working part-time, or doing consulting or pursuing an income generating hobby?
Health Questions
               Are you healthy?
               Do you have a Chronic Illness or Do you currently have special health issues that need consideration? If so have you planned on how these will be looked after?
               Do you have long-term disability insurance?
End of Life Planning
               Do you have life insurance?
               Do you have a will?
               Do you know the importance of having a Power of Attorney for medical and financial matters?

If you start your retirement planning process early and take it step by step, making it a priority project, as if your future life depends on it — which it does — you just might be living your dream during your retirement years.

There are a couple of resources that may help you to feel more relaxed about financial planning. The first book by Ralph Warner (founder of Nolo Press): "Get a Life: You don't need a million to retire well."
Money for retirement doesn't matter? Well, not exactly. Warner puts a different spin on how to prepare for retirement by recognising that a sensible savings plan is important, but the real keys to a successful retirement are good health, spiritual life, relationships with family and friends, and having interesting things to do.

Some of the author's main points are: (1) The difference between a happy, fulfilling retirement and "waiting for the undertaker" is not money but quality of life -- family, friends, good health, and meaningful activities that give you a reason to get up in the morning. (2) It's possible to estimate fairly accurately how much money you'll need to live on after you retire, and in most cases, it's nowhere near the "70% of your present income" that the doom-Sayers insist that you need to maintain your present lifestyle. The author tells readers how to access a free set of "retirement calculators" on the Nolo Press web site to assist them in financial planning, and that alone is worth the price of the book. I have linked to the calculators here, but you should still read or buy the book.

This book will empower you. Personal Finance is marketed to us with wild and entertaining stock-picking shows on Television and by the Big Banks as something that is complicated. As shown in this book it is not complicated. As the title indicates, Olen's and Pollack's answer fits on an Index Card.
1.           Strive to save 10%-20% of your income.
2.           Pay your credit cards off every month (and minimise other debt).
3.          Maximise your 401(k) and other tax-advantaged savings accounts.
4.          Never buy or sell individual stocks.
5.          Buy inexpensive well-diversified indexed mutual funds and exchange-traded funds.
6.          Hire a fee-based fiduciary (avoid commission-based financial salespeople).
7.          Wait to buy only as much home as you can afford  (remember homes are usually highly-leveraged investments with high maintenance costs).
8.          Buy term life insurance, auto-insurance (especially liability), home insurance or renter's insurance, and disability insurance.
9.          Support the social safety net (government programs,  such as Social Security, Medicare, Medicaid, and student loans, because 96% of American depend on such programs for financial assistance, even though  40% deny obtaining help from the government.)
10.      Keep doing the first 9.

1 comment:

  1. This is a very helpful article. it should be published and read more by people like us.