How will you live when you’re no longer working? Will you travel to places you’ve always dreamed of? Spend long afternoons building Lego castles with your grandchildren? Perfect your backswing? Or worry about every dollar you spend?
Planning for retirement is often treated as a numbers game, but it’s far more than that. It’s an opportunity to decide how you will spend what can be the best years of your life. What time will you get up? Who will be sitting across from you at the breakfast table? What will the view from your window look like? What kind of daily routine will make you happy, day by day, during this new chapter of your life.
Everyone’s ideal life after retirement is different. It depends on you and the relationships you treasure, the places you love, and the passions you have for life outside work. The emotional layer to retirement planning tends to be treated as an afterthought, when in reality it can have a significant impact on your overall retirement plan.
Here are some basic questions you can ask yourself about how you want your day-to-day retirement life to look like to help bring some valuable emotional context to your financial picture.
Consider your family home, the place you’ve lived for years, raised your kids, mowed the lawn, and shoveled the driveway. Is it time for another chapter? At this stage, you may want to be closer to your children and grandchildren, so you can drop everything to attend a little league game or a dance recital. You may be looking for a place that’s easier to take care of. Climate can be a consideration. You may want to enjoy warm weather year-round or live closer to the ski slopes. You may prefer to live in a city within walking distance to groceries, libraries, and movie theaters.
Whatever you decide, you’ll need to think about the financial angle. How much will it cost to live in your ideal post-retirement setting? Property taxes can vary significantly depending on where you live, and even income and sales taxes can have an impact on your post-retirement living costs. If you’re planning to stay where you are, think about how property taxes, living costs, and home maintenance will affect your finances.
Retirement can give you the time and opportunity to do the things you enjoy the most or try new activities. Ask yourself what you would do if you did not need to go to work every day. Have you always wanted to visit the pyramids or while away an afternoon in a sidewalk cafe in Paris? Maybe you want to volunteer to teach young people the skills you’ve developed over a lifetime in business or to play a larger role at your church or other religious institution. Or maybe you just want to relax at the beach or in front of a fireplace with a good book. You might even want to continue to work in some capacity, take up a passion project, or pick up a hobby that can turn into an additional income stream.
You may have to enact some financial strategies to turn those aspirations into a day-to-day reality. A financial professional can help build in funding for how you spend your time in retirement, whether it is a once-in-a-lifetime vacation, a country club membership, or an in-home office or studio. You can also discuss whether you’ll be earning any money from your post-retirement activities and incorporate that into your overall financial strategy.
Not everyone retires at 65. You might be ready to stop working at 50, or you may love your job so much you never retire at all. It’s up to you.
However, your age at retirement (or semi-retirement) can have a significant impact on your retirement planning. You’ll get a larger Social Security benefit, for instance, at age 70 than at age 62, although taking Social Security benefits earlier can help support your lifestyle needs. That way, you can keep your retirement and insurance assets growing for longer before you withdraw them. Many life insurance and annuity policies also provide a larger benefit when you wait to tap into them. A later retirement can give tax-deferred retirement plan assets more time to appreciate before you begin making withdrawals.
A financial professional can give you guidance on how your intended retirement date could affect your overall financial picture, taking your assets, projected income stream, and living costs into account. Consider the impact of taxes, mandatory withdrawals, and savings as you exit from the workforce.
In the end, why these things are important to you is the most important question of them all. Being able to tie in the values and priorities that matter most to your retirement planning will help keep you motivated toward reaching your targets.
At its core, your retirement plan is a financial matter, but it is also a deeply emotional one. When you have a strategy that is firmly rooted in your why, you can let those emotions drive you in the direction of your goals.
Having an answer for why you want your ideal retirement life to look a certain way will also allow a financial professional to customize your retirement plan to both your emotional and financial needs.
By strategizing your post-retirement lifestyle in detail, you can get a better understanding of how much income you’ll need to make your vision of an ideal retirement a reality. Whether you’re on track to meet these goals, or still have a way to go, a financial professional can help you incorporate these factors into your budget and gauge their impact on your retirement plan. The more detailed you are about your retirement goals, the easier it is to make a plan that will help you accomplish them.
The ideal retirement looks different for everyone. Your priorities, goals, and financial situation will invariably impact what you can achieve. A financial professional can guide you through the process of thinking carefully about the who, what, when, where, and why of your retirement and help you with a strategy that will let you live the life you’ve dreamed of. Why not get started today?
This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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