For many people, retirement planning means saving enough money to cover expenses after they stop working. Whether they sock money away into a 401(k), IRA, a savings account, or just stuff cash under the mattress, getting ready to retire is just about the money.
While having enough money to pay for housing, food, and other expenses is certainly very important, it’s not the only concern if you want to have a fulfilling retirement. There are several other issues to address before you say goodbye to the working world for a new life of leisure, which can make a big difference in how comfortable you feel — and your family feels.
So before you start planning your retirement party, make sure you’ve addressed these important issues.
1. How Will You Fill Your Time?
If you have spent the last four or five decades working, suddenly having your days free is bound to present some challenges. Not only will you no longer have your actual work responsibilities, but also your off-hours won’t be spent thinking about work, either. You might have images of traveling, spending more time with your family, pursuing a hobby, or other ideas, but do you really know how you will spend your days?
Before you stop working, take some time to imagine how you want to spend your days as a retired person. It’s certainly valid to spend a few weeks or months relaxing, but eventually you will want something more fulfilling. Make lists, explore your options, and set goals before you retire to make the transition easier, and avoid the feelings of being lost or unfulfilled that plague many retirees and often lead to depression — or a desire to go back to work.
2. Make Your Estate Plan
For most of your career, you’ve probably been more focused on acquiring assets than you have been on how you plan to use them, both in retirement and after your death. This time when you are shifting into a new phase of life is the perfect time to think about how you want your estate to be handled after your death.
By making a plan now, which might include drawing up wills, establishing trusts, or designating new beneficiaries, you may be able to protect and maximize your assets while you’re still alive while also making sure that your loved ones receive everything that you want them to.
3. Consider Insurance Coverage
While the majority of Americans over age 65 qualify for Medicare health coverage, you still have to make a few important decisions about your health coverage to ensure that all of your needs will be met. For example, you may opt to purchase a Medicare supplement plan to cover additional services, or a Medicare Advantage plan that will meet all of your needs with one policy.
You’ll have to choose a Part D plan to cover your prescriptions, as well. If your employer offers health insurance to retirees, compare their policies to your Medicare options to ensure that you are getting the best deal.
Health insurance isn’t your only concern, though. Most financial advisors strongly recommend that retirees purchase long-term care insurance to help cover assisted living or nursing home costs, should you need them; more than 70 percent of older Americans do need some sort of long-term care, making this coverage a good investment in your financial security.
If you do not have life insurance, now is the time to buy; consider adding a small “final expense” policy that’s earmarked specifically for expenses related to your burial. Doing so prevents your loved ones from having to pay for your expenses out of pocket or take money from your estate.
It’s also a good idea to review your homeowner’s and vehicle insurance policies when you retire. You may be paying for more coverage that you need. For example, if you are no longer driving your car to work every day, the lower mileage could qualify you for a lower insurance rate. Not to mention, there are specific insurance programs for retirees that offer comprehensive coverage at lower rates than you may be paying.
Retirement is an exciting time, and one that many people look forward to — even if “retirement” means days full of activity and in some cases, even a new career. The more prepared you are, financially and emotionally, the happier and more fulfilled you will be when you are no longer working.
Questions: What other things do you need to think about before retiring? What do you plan to do once you retire? Do you have a will or an estate plan ready?