My practice is focused on helping families move from “saving to get retired” to “living comfortably in retirement.” Part of that process is understanding your retirement goals. As you reflect on what’s important to you in your retirement, I offer this list of seven things I think you should own as you enter retirement.
- Emergency Fund.
Everybody needs an emergency fund, but if you have stopped earning income, it’s even more important that you keep cash at hand to cover the unexpected expenses that will come up. Whether it’s a car repair or a home repair or a medical co-pay, there is always some added expense. I recommend that my retired clients keep 6 months of routine bills in cash as an emergency buffer. - A Reliable Car.
Many folks talk about retirement and think of all the things they won’t need. In America, you will always need a car and, if you are retired from your 60s to your 90s, you will likely need a few cars over that stretch. And reliable transportation means freedom. You will want the flexibility to go where you want when you want. So, budget for a reliable car that you replace every few years. - An Affordable Home.
Many people talk about paying off the mortgage and living “debt-free.” It’s a nice image, but it’s a bit misleading. First, you will want a comfortable home that you can afford to maintain. But this might not be the home in which you raised your kids. You might also want a place to stay in a warm climate for a few weeks in the winter. In any case, each home will have property tax, maintenance, utilities, and related expenses. You should be thinking about HOW you want to live in retirement and what sort of a home, or homes, that will require. - Good Health Insurance.
As we age, we will need more health care. Over time, that care will increase in cost. So, you want to have insurance to help pay for that care. When you reach age 65 you qualify for Medicare, but that only covers 80% of covered medical care. Most people purchase supplemental insurance to help pay for the remaining 20% and to cover special needs. One common category of supplemental insurance is drug coverage that can help pay for the medications you need to take on an ongoing basis. You will need to budget for the cost of this insurance in retirement. - A Good Suitcase.
In retirement, you will want to do fun things. For many retired couples that means travel. For some, it’s just visiting each grandchild every year. For others is a round-the-world cruise. In any case, you want quality luggage that suits you. Think about where you want to go and how you want to get there. Be sure to budget for the travel you plan to take in retirement. - Good Healthy Lifestyle
For most folks retiring in the 2020s, retirement includes a lot of activity. Most of us can expect to be retired for at least 20 years and often more than 40 years. There are plenty of things we want to do, and a healthy body will make that much easier. Give some thought to how you will maintain a healthy lifestyle as you age. You might want to join a health club or gym. You might want to take yoga classes. When you incorporate physical activity and a healthy lifestyle into your retirement you can expect good results. - Continuing Education to Keep Your Mind Sharp.
As I have already said, many of us will be retired for a long time. If you keep your mind engaged, the journey through retirement can be a lot more fun. Many experts believe that brain teasers, puzzles and games can help slow the onset of age-related mental decline. It also makes life more fun.
As you review this list, you will find several areas that would benefit from some planning and maybe even the advice of a well-trained, experienced Certified Financial Planner™ professional. Yes, I am a CFP® and yes, I’m taking on a few new clients each year. Follow this LINK if you would like to find a time for us to talk about preparing for your retirement.
If this article has you thinking about your own circumstances, contact my office at rdunn@dunncreekadvisors.com. I am always happy to meet with people who are working on their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.