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Are You Ready to Retire? Test Your Retirement Planning Before It’s Too Late

November 27, 2019

It has often been said that retirement is the longest and most important vacation of your life, and you only get one chance to get it right. By the time you are ready to retire, you no longer have the luxury of time, and even a single oversight could have devastating consequences for your financial well-being.

So are you really ready to retire, or should you put in a few more years before grabbing that gold watch? Here are some key factors to consider when you find yourself on the cusp of your long post-career vacation.

Have You Maximized Your Retirement Savings?

As you stand on the threshold of retirement, you have one last chance to make the most of your retirement plan contributions. Adding a little extra to your 401(k) plan, IRA, or other tax-deferred saving vehicle carries a host of benefits, and you should not ignore the opportunity.

Contributing a few extra dollars to your retirement accounts now could vastly increase the lifespan of those investments, giving you additional breathing room down the line. Boosting your contributions can also lower your taxes, so you will have more money to work with as you start your retirement years.

Do You Understand Your Social Security Options?

Even if you have additional savings and investments, your monthly Social Security check will provide a financial backstop, but do you know how to make the most of it? There are dozens of claiming options for Social Security, and lots of key decisions to make.

From when to start claiming your benefits to how to maximize the monthly checks for a surviving spouse, developing a sound Social Security claiming strategy is no easy task. If you have not yet thought about Social Security, now is the time to get going. Spending some time with a Social Security expert or financial planner can help you maximize your benefits, giving you additional breathing room in retirement.

Should You Test Drive Your Retirement?

No matter how prepared you think you are, you can never truly know how your retirement years will play out. From what to do with all your free time to how to budget for living expenses, retirement can be full of uncertainties.

With that in mind, why not take your proposed retirement for a test drive? If you have some accumulated vacation time, you can try out your retirement lifestyle while there is still time. Start by living on your retirement savings, sending your paychecks into a savings account instead. It may be a limited financial test, but this test drive could be a real eye-opener.

Even if your test drive is successful from a financial standpoint, there is still the matter of all that free time. If you find yourself bored during the test drive, you might want to think about a second act or post-retirement career.

How Will You Pay for Healthcare Expenses?

Healthcare is a major concern for retirees, and the cost of staying healthy could be more than you anticipated. Even if you are eligible for Medicare from day one, you will still need to budget for a Medicare supplement and think about uncovered expenses.

Before you sail off into retirement, you need a plan for those healthcare expenses. Even if you are healthy now, you could face declining health, and increased expenses, in your later years.

Do You Know How Much You Will Really Spend?

The idea that you will spend less in retirement than you do now is so common that you may not give it a second thought. Even so, that assumption is far from certain, and many retirees are surprised at just how expensive their post-work lives are.

Before you assume you will spend less in retirement, sit down and run the numbers. Think about the costs that will go away, like those fancy work clothes and the daily commute costs. Now think of costs that are likely to go up, like money spent on hobbies and more frequent vacations.

Armed with those figures, you can work out a retirement budget that makes sense. Once you know how much you are likely to spend, you can work backward to make sure you have actually saved enough to last a lifetime.

If you are thinking about retirement, the steps you take now could resonate for a lifetime. Even if you think you are ready, a little extra attention could make a big difference. So ask yourself these important questions, so you can truly enjoy your post-work vacation.

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