Are you planning to retire soon? Are you dreaming of the retirement phase of your life? It is easy to fantasize about how you might spend your time: traveling, spending time with loved ones exploring hobbies, etc.
Well that is the easy part. If you are seriously considering retiring in the next year or so, below are some recommendations for things that need to happen before you start hinting at retirement party ideas at work.
Consult your financial planner/adviser. Ask for advice and guidance through the process. Hopefully, you have been monitoring your savings and have an idea of where you stand. If not, now is the time to determine if you have enough savings to retire in the first place.
Not sure how much money you need to have saved up? Not to worry. Financial planners have cost of living calculators and can assist with this part of the process. Your financial planner will provide you with an estimated monthly income level for retirement. Basically, it comes down to how you want to live in retirement. The more lavish your lifestyle, the more you need to have saved.
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Schedule time with your human resources department. Most companies have formal policies and procedures related to retirement. Many require advanced notice of three to six months and paperwork you will need to complete. Ask about accrued vacation and sick time as some firms will pay out the value of that time, others will not. Be sure to ask about post-retirement benefits, especially healthcare options.
Reassess your budget. Invest time in developing a budget of recurring expenses. Determine the minimum amount on which you could live and include basics such as housing, utilities, transportation, healthcare, groceries, etc.
From there build an ideal retirement budget and estimate for restaurants, entertainment, travel and other additional desired budget lines. Consult your notes from the meeting with your financial planner and compare the estimated monthly income to the budget and adjust as necessary. You may need to follow up with your financial planner at this point.
Study up on the Social Security process. Visit the Social Security Administration website. Seek advice of relatives or friends who have been through this process so you know what to expect. Read the FAQs and find your birth year in the Retirement Age Calculator to learn about your benefit eligibility and when you can maximize your benefits. When you are ready, you can begin the application process online.
Make a plan for healthcare needs. Some companies offer retiree healthcare plans, so be sure to ask your human resources department about those options. Brush up on the process for applying for Medicare coverage. Often Medicare coverage is not enough. Explore Medicare Supplemental Insurance, often called Medigap, options. Consult others and explore multiple options so you may make an informed decision that is best for your individual situation.
Consider housing changes. Many retirees downsize their homes in this stage of life. Selling a larger home, purchasing a smaller home and saving those extra funds for future living expenses is certainly an option. Smaller homes often are accompanied with lower utility and maintenance costs which can have a huge impact on your monthly retirement budget. Of course, not everyone that retires goes this route. If you host family and guests often, this may not make sense for your lifestyle.
Explore alternative means of income. Also called a side hustle or gig work. Many retirees will continue to work part-time or pick up a part-time gig after a few months into retirement. Part-time work or project-based work allows for more flexibility and less commitment than full-time work.
Some retirees are attracted to part-time opportunities in order to continue engagement with their community. If you retire and find yourself living over the estimated budget or missing some community engagement, picking up part-time work can help to offset those expenses and fulfill this need.
Envision the future. How do you want your daily life in retirement to look? What goals do you have for your retirement? Start a list of activities and things you want do. Spending time with grandchildren, writing a book, traveling to a new place, etc. The sky is the limit! Well, the sky and consultation with the budget is the limit.
Amanda Schagane serves as a career coach in the Gatton College of Business & Economics at UK. She is designated a Master Career Counselor by the National Career Development Association and has served as president for the Kentucky chapter of the organization. Join her on LinkedIn or email her at Amanda.Goldsmith@uky.edu.