How Will You Spend Your Money In Retirement?
Wanting to feel confident about finances is often the first expectation people have when they think about retiring. “Can I actually afford it?” And “How much do I need?” are both very real concerns. Once you begin to think seriously about leaving your full-time job, it’s also time to consider: “How will you spend your money in retirement?”
Recognize the answer to this will help you (and your financial advisor) determine what level of savings you actually need and when you’ll be able to afford retiring. Yes, you need to feel financially secure, but what amount of money will you need to support your standard of living and allow you to live a happy life in retirement? While it’s critical to think about all the uses for your money, your goal is to balance out what you have with what you want to do.
Because we know money is a key factor in planning for retirement, we often worry about it. But how do we ever feel comfortable knowing that what we have saved is enough. As a result, we need to think about how we would answer these questions:
- What do you want your retired life to look like?
- What do you want to do in retirement?
By putting some serious thought into defining your retirement expectations, you’ll be in a better situation to figure out your overall financial picture. Therefore you’ll be able to think about your future retirement in a realistic way.
In addition, here are some of the financial considerations you should think about as you begin to plan for retirement. As a result, this should jumpstart your thinking about what needs you may have. What resources will you need in these areas?
- How often do you want to visit with family members?
- Who will live with you in retirement?
- What activities will you do with your friends?
- Will you plan trips to see them?
- Will you travel together?
- Do you want to leave a financial legacy to your family?
- Do you want to leave funds for a special cause?
- Is leaving a financial legacy even important to you?
- Are you thinking about funding a long-term care plan?
- Have you set aside funds to make sure you have adequate health coverage?
- Do you want to stay in your current house or move?
- Where will you live as you age?
- If you need help in your later years, will you have funds to pay for it?
- Will you rely on family members to care for you?
- What interests do you want to pursue?
- Are you interested in going back to school?
- How will you spend your time once you retire?
- Are you planning to downsize you household goods?
- If collecting certain things is your passion, will you collect more of them in retirement?
- Where do you want to go?
- How often will you travel?
If you’re in a committed relationship, you definitely need to have a conversation about expectations in these areas. While couples often assume they “know” what their partner wants, they can be totally surprised to find out that’s just not the case. Much as they know their partner so well in many areas, expectations for retirement can be a huge surprise. Begin to have the conversations about your retirement lifestyle long before the big event happens. It could prevent a lot of unhappiness in your house!
Determining how you will spend your money in retirement is key to feeling more comfortable with your decision to retire. You really do need to give consideration to how you’ll live your life in retirement in order to plan for it the most effectively.