Setting yourself up to retire in style
A good retirement plan should take years rather than months to design. In the five years leading up to formal retirement, key decisions regarding living arrangements, healthcare and expenditure need to be made to ensure that the final plan is workable.
To ensure your retirement plan is sustainable, consider the following questions in the years building up to retirement:
Where you intend living in your retirement years will significantly impact the rest of your retirement plan, so it is important to give careful consideration to this.
When deciding where to live in your retirement, consider the following:
Your proximity to children, grandchildren and family, bearing in mind that if you do not intend living close to your loved ones, you will need to build travel costs into your post-retirement budget.
Your proximity to doctors, specialists, hospitals and medical facilities.
Your safety and security. The maintenance and upkeep costs of the home.
Any levies, cleaning services or garden services that you will be responsible for paying.
Your future travel and holiday plans which may require you to consider lock-up-and-go accommodation.
Your pets and whether you will be permitted to take them with you.
While the rule of thumb in terms of budgeting for post-retirement expenses is between 70% and 80% of pre-retirement expenditure, this is not a perfect science.
In addition to budgeting for your normal living expenses, consider the other possible costs in retirement such as:
Travel costs if your family lives far away or abroad.
The costs of renovating or altering your home if necessary.
Transfer fees if and when downscaling to a smaller home.
Vehicle upgrades retirement.
Large medical expenses such as hearing aids and wheelchairs.
Entertainment and hobby costs. during
Many retirees use their formal retirement as an opportunity to launch a second career, start a business or pursue a hobby.
Some retirees do so in order to generate extra income, while others do it merely to remain active and engaged.
When contemplating your transition into retirement, consider the following:
You may want to find innovative ways of monetising a hobby or passion which could take some advance planning and testing.
If you plan on starting a new business, ensure that you do not put your retirement capital at risk.
If you want to stop working completely, give careful thought to how you will fill your days.
Find out from your employer whether you are obligated to retire at 65 or whether you are permitted to work longer.
Find out how your employer feels about working reduced hours or working on a contract basis.
Eric Jordaan is a director at Crue Invest