Regardless of if you are 30 or 50, the idea of retirement probably crosses your mind regularly. Once we dive into our working years, retirement becomes the ultimate goal. It's the promise that one day we'll be able to reap what we've sown from years of hard work and dedicated saving, and many of us relish the idea of slowing down, changing pace, and finally having all the time we need to pursue passions and invest in relationships.
Retirement is arguably one of the most pivotal milestones you will reach in life. That’s why it’s so important to prepare for all aspects of the transition so you can enjoy the fruits of your labor. Take a look at these four tips that will help you achieve a regret-free retirement.
1. Retire At The Right Time
Sometimes life doesn’t go as planned and you don’t get to retire when you want to. But if you do have a choice as to when you enter your golden years, making accurate calculations and preparing for multiple scenarios can help you retire at the right time for your situation.
For example, if you decide to retire prior to turning 65, you will most likely need to find pre-Medicare health coverage, which can be quite a bit more expensive than an employer-sponsored plan. And retiring earlier rather than later means your monthly Social Security benefit could be reduced. If your finances are set up to handle these factors, then you are in good shape. But if not, consider working even a few years longer to reap these valuable benefits:
- More time to accumulate savings
- More years to apply toward Social Security, which could result in a larger benefit amount
- Health insurance coverage through your employer
- Purpose and identity
- Stronger mental and physical health (1)
2. Create A Social Security Strategy
Social Security benefits can be claimed anytime between ages 62 and 70. However, the timing of when you choose to collect these benefits will impact the amount of benefit you receive.
Full retirement age (FRA) changes based on the year you were born. For those born in 1937 and earlier, FRA is 65. After 1937, two months is added each year until FRA becomes 66 for those born between 1943 and 1954. Starting in 1955, two months a year is added again until the FRA becomes 67 for those born in 1960 or later.
If you wait until you reach full retirement age to begin collecting your Social Security benefits, you will receive your full Primary Insurance Amount, which is the full benefit that you have earned, but if you choose or are forced into an early retirement, you will receive a reduced benefit. Your basic benefit is reduced a fraction of a percent for each month you begin receiving benefits prior to full retirement age, up to 30%.
3. Set A Realistic Retirement Budget
Even if you have a solid nest egg saved to carry you through retirement, it is still prudent to exercise financial discipline to ensure your money lasts. Make a list of all of your expected expenses, as well as extras, like travel or hobbies. Then work with your advisor to create a withdrawal strategy designed to stretch your money for as long as possible while still allowing you to accomplish your dreams.
4. Write A Retirement Bucket List
Free time is a major perk of retirement, but when you go from working full-time to not working at all, it can be a shock to your system. One action that will help you with the transition is to plan ahead to fill your time with activities that bring you joy.
According to a BMO study on retirement planning, retirees who stayed busy and active, pursued independence, and volunteered their time were satisfied with their life. (2) One study of retirees even found that those who volunteered 200 hours a year were less likely to develop high blood pressure. (3)
The takeaway here is to be intentional about your time in retirement. Make a list of things you want to do, places you want to go, and people you want to spend time with, then strategically map out the details so your goals become a reality. It’s easy to lose your identity when you say goodbye to your career, but filling your time and venturing out into new territory will help you build a new identity and give you something to look forward to.
Live With No Regrets
No matter what your situation, it’s possible to enjoy your retirement with added confidence. At Savaglia Investments, we understand that deciding when and how to retire is a difficult decision, but we want you to know that you don’t have to make the hard choices on your own. Our top priority is to find out what your ideal retirement looks like and work with you to make it a reality. If you want to plan for a regret-free retirement, schedule a complimentary get-to-know-you appointment online! You can also email [email protected] or call 414-768-1984.
Don Savaglia is the CEO of Savaglia Investments and Planning and a financial advisor with more than 20 years of industry experience. He is passionate about making an impact on the lives of his clients and helping them secure a confident future through retirement planning. He works closely with clients to develop a plan that is unique to each client’s financial goals, their desired retirement lifestyle, and the age at which they wish to retire. Learn more by connecting with Don on LinkedIn or visiting www.savaglia.com.
Information is provided by Crystal Sdano and written by Indigo Marketing, a non-affiliate of Cetera Advisor Networks LLC.
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