1. Plan for longevity
People are living longer, and that means your money will have to last longer than you might expect—even two or three decades. In fact, someone who is 65 years old can expect to live another 19 years, according to the National Center for Health Statistics. Since retirement today doesn’t automatically mean you’ll stop working completely and live off a pension, you’ll need to ask yourself these important questions to prepare:
Do I expect to keep working?
Many people in their late 50s and early 60s are already planning to hold on to jobs longer, while others are pursuing “second acts.” If you’re financially stable, you may be able to pursue fields and attain positions that fulfill your passions as well as your pocketbook.
Where do I want to live?
Contrary to popular belief, the majority of baby boomers in their 50s and 60s are not planning to downsize and head for a condo in Florida or Arizona. Nearly two-thirds have no plans to move at all, according to a recent survey. Many boomers will “age in place” in homes and communities where they’ve lived for years. Those who move don’t plan to go too far so they can stay close to their families. Boomers who are still looking for their “dream home” are the exception. In that case,
housing costs might actually increase in retirement.
Will my cost of living change?
Get a handle—even a rough estimate—on how much your monthly expenses will be in retirement. Include essentials that are in your current budget but also consider expenses that could grow exponentially, like health care. If you have a job that offers health benefits, you probably haven’t spent much time thinking about the total cost of your medical, dental and vision expenses. Medicare won’t cover everything. In 2016, Fidelity estimated that a couple, both age 65 and retiring that year, could expect to spend about $260,000 on health care throughout retirement. Go to Parade.com/retire to do some calculating of your own.