4 questions to ask before you dive into retirement
The transition from career life to retirement can be awfully bumpy.
Before you decide to proceed with such a major life change, it’s a good idea to ask yourself certain questions.
1. AM I READY FINANCIALLY?
You may be psychologically ready for retirement, but if you’re not financially ready, you’ll have a pretty miserable retired life.
Before taking the final leap, review your retirement savings accounts, your Social Security statement and any other sources of retirement income you have lined up.
Add up your annual sources of income to see how much you’ll have coming in each year (for retirement savings accounts, assume you’ll be taking 3% to 31⁄ 2% per year), then compare the resulting total to your current income.
2. WHAT WILL I DO?
The more involved you are with your career, the more jarring it will be when you retire and leave that career behind. It’s important to come up with something before you retire that will take the place of your career in retirement.
You might enjoy such a relaxed lifestyle for a few weeks, but many people find that boredom quickly sets in. One way to ease the transition to retired life is to switch to a part-time schedule for a while.
3. WHERE WILL I LIVE?
Your living situation may or may not work for you in retirement; it’s certainly something that you should consider in advance.
For example, if you own a big house, it may be more home than you really need, and the time and energy that you currently spend on cleaning and upkeep may be more of a commitment than you want to make as you get older.
Even if you are in good health, you might want to think about moving into an assisted-living community.
4. OTHER CHANGES?
Switching over to retired life is pretty jarring for your finances, too. And it’s not just a matter of changing over your sources of income and the kinds of expenses you’ll incur.
For example, once you retire you’ll no longer have an employer withholding income taxes for you. You’ll have to calculate and pay your own income taxes. Most retirees are required to make quarterly estimated tax payments to the IRS and sometimes to their states, as well.
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