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Retirement is one of those things in life that we spent a large amount of time, sometimes even your entire life, preparing for and working toward. How can you be best prepared for this momentous occasion? Working with a qualified financial planner is a great start, because they can help you overcome your own behavioral biases when investing so that you can make better long-term decisions regarding your retirement. Here are five additional tips to help you as you plan for retirement.
You Will Know When You Are Ready.
Big transitions in your life don’t require someone else to tell you when you are ready. They, in a way, can’t be forced. Just like how you know when you’re ready to get married, or to start a family, you’ll know when you’re ready to retire as well. No matter how much pressure you are under, your body just knows when you are ready to take that next step. The same holds true with retirement. You’ll know when you are ready when you are mentally ready.
Just Because You Are Mentally Ready, Are You Financially Ready?
You need to stress test your retirement income and expenses. This is a critical step as most people don’t meticulously budget and have been reliant on some company to pay their expenses for the past 40 some-odd years. Once retired, this whole equation gets flipped on its head. Do you feel confident in your ability to have your assets and fixed incomes meet your expense needs?
Give Retirement A Test Drive.
Speaking of making sure you are financially ready, why not spend the year or so leading up to retirement taking a real audit of your ability to meet your needs? You’ll feel much more confident in your ability to retire if you’ve actually taken notice of your cash flow leading up to retirement. Most people simply retire without actually understanding what it entails. Don’t make the same mistake as so many that have come before you. It is one of the biggest decisions of your life and should be treated as such.
Retire To Something Not From Something.
One of the big mistakes people make when it comes to retirement is running from something, and not quite running to something. This leads people to either retire when they aren’t ready or retire and not maximize this precious time in their life. Now is the time to do some real soul searching to ensure you are living your best retirement life.
Take Care Of Big Expenses Now.
Have you been wanting to redo that kitchen, or purchase that dream car? You will feel a lot better doing it while still working. Sometimes these things end up costing more than we think, and you’ll be sweating it out if it is eating into your retirement savings. Unforeseen expenses arise can certainly arise during retirement. That said, do your best to get them done now. If they cost more than anticipated, you can always work a few extra months.
These tips can help you plan for your retirement, but they can’t help you alone. Retirement is a complicated undertaking with many moving parts, from your finances to your insurance to your health and how you want to spend your time. You’ll need to have multiple conversations with a variety of people (a financial planner, insurance and tax experts, your family and medical professionals) to get a good understanding of what your life might look like in retirement. Spend time thinking about where you want to live, and how you want to live out the rest of your life when you’re finished with work. Factor in how Social Security and Medicare might play into your retirement finances, and think though unforeseen costs such as healthcare and nursing homes. Most important, honor your own wishes in how you want to live your life.
Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax advisor, accountant, or other professional concerning the application of tax law or an individual tax situation.
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