If nearing retirement age, then you’re entering what can be one of the most exciting, enjoyable and rewarding times of your life. At the same time, it can be scary if you’re not fully prepared for this major step in life, wealth management specialist D. Paterson Cope says.
Before you jump head first into your golden years, there are a few questions that you need to ask to ensure you are prepared for what’s ahead. By asking the five questions below, you’ll be better prepared for your future retirement.
1. What does retirement look like?
Retirement is a rather general term. What retirement looks like for one person may not look the same for someone else.
The first step in preparing for retirement is to define what it looks like to you. Do you plan on traveling a lot, picking up a new hobby, staying ultra-active?
Having a clear vision of what you want your retirement to look like will help you stay active and not get bored. It’ll also help you plan financially for the lifestyle you wish to have.
2. Where will you live?
Some retirees move to a new home when they start working, while other stay put. What are your plans?
Housing can be one of the largest expenses for retirees, depending on the answer to this question. If your home is already paid off, you may decide to stay in it and shift that money elsewhere.
You should consider how far you currently live from friends and family, though, and whether moving closer would actually help you save on costs. Many retirees want to spend extra time with loved ones when they stop working, but this can get expensive to travel back and forth if you don’t live close.
3. Do you plan to cut back?
Most retirees cut back in certain areas of their life to compensate for the fact that they won’t have a normal, steady income anymore. For instance, even those who have a well-funded retirement account may only be able to afford 80% of their pre-retirement budget in retirement.
So, what are your plans to cut back? It’s a good idea to come up with a list of where you can cut expenses, and not just because you’ll likely be bringing in less money. It’s also important to plan for additional expenses in areas such as travel and health care.
4. Have you saved for health expenses?
Speaking of health care, it can often be the most expensive line item in retirees’ budgets. As we age, we often need more medical attention, which comes with additional cost.
Have you factored this into your retirement plan? If you haven’t, D. Paterson Cope says it may be best to speak with a financial advisor to gain perspective on how you can adjust.
5. Do you have an estate plan?
Many people want to leave something behind when they pass, but since we never know when that time might be, it’s best to have everything in order early on.
A critical part of any retirement plan is an estate plan. This plan will clearly describe what you want to happen with your assets when you pass away. Not only will this give you peace of mind that your wishes are being granted, but it’ll also prevent your beneficiaries from having to go through the process of probate, which can cause plenty of issues and headaches.
About D. Paterson Cope
Paterson Cope, CFP® is the founder and CEO of Cope Private Wealth, a financial planning and wealth management firm specializing in assisting retirees and people who are about to retire. D. Paterson Cope has been providing financial advice for more than 30 years. He first earned the designation of Certified Financial Planner (CFP) in 1997. When he isn’t working, he enjoys spending time with his wife, Jennifer Miree Cope, and the rest of his family in Mountain Brook.
