ready to retire?

“What is the burning issue that prompted you to call me?” That’s the first question I ask people who reach out for financial guidance. Often, they want to know, “How soon can I retire?”

I have learned over time that there are many unspoken concerns behind that question. When I listen closely, I hear, “I am tired, I am stressed, and how many more years do I need to continue doing a job that is draining me?”

More often than not, I also hear people talking more about what they are retiring “from” than what they are retiring “to.” Of course, it’s important to clarify your financial capacity to replace your paycheck when you are no longer working, but it is equally important to understand and plan for the impact of leaving the working world and how that will affect you emotionally. Perhaps it is time to redefine our goal from that of retirement to financial freedom: the ability to choose how and where to spend our time and energy.

Having worked on Wall Street for many years, I know the emphasis is on the monetary part of building wealth to achieve freedom. Certainly, earning money and investing for growth are part of the equation, but often the part we have the least control over. My “wealthiest” clients consistently live below their means and add to their savings each month. There is no magic formula for accumulating wealth. Discipline and patience are the key strategies to move you forward financially.

Some specific financial questions to ask yourself as you near retirement include:
1) Do you intend to engage in part-time work when you retire? Working part time may provide the sense of satisfaction you had in your full-time career, while extending the life of your retirement assets. Keep in mind that earning a high income can trigger additional surcharges for Medicare as well as impact your social security income, if you elect to collect before your full retirement age.
2) How will you meet your medical expenses in retirement? If you retire at age 65 or older, you are able to enroll in Medicare. If you are younger than 65, alternatives include being added to your spouse’s employer health insurance, purchasing insurance from the health insurance marketplace, or electing COBRA. (The health exchange is usually less expensive than COBRA but you have to be off it when you turn 65. Also beware of penalties if you don’t sign up for Medicare on time.)
3) How will your expenses change in retirement? It is reasonable to assume that expenses for travel and leisure may increase when you first retire, and then decline as you age. Per above, coming off a company health plan may also trigger higher health insurance premiums. And consider expenses that may go down or disappear altogether.
4) How do you intend to replace your paycheck? Determine the stable sources of income available to you in retirement, including social security and pension income. Assess other anticipated sources of income, such as withdrawals from investment accounts; make sure you understand the tax implications as well as the risk profile of each account.

It is never too early to start thinking about your feelings and attitudes about this time of life, and to start visualizing what you want retirement to be and mean.

Some questions to ask yourself include:
a.  What are you most looking forward to in retirement?
b. What are you most concerned about in retirement?
c. What, if anything, will you miss most about the job you have today?
d. How do you plan, if at all, to change your lifestyle in retirement?
e. What would your ideal week in retirement look like? How will you invest your time?
f. What are some goals you would like to accomplish or experience in your lifetime?

Depending upon your emotional relationship with money, you may never be completely comfortable with spending the money you spent your career saving. I encourage you to work with a financial planner to ease your concerns about your finances, and to help you make your life in retirement enjoyable and fulfilling.

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