A Retirement Plan is Only Effective if You Have a Clear Picture of What You Want in Retirement
You’ve likely thought quite a bit about retirement, but have you clarified your goals for your retirement lifestyle? It’s an important consideration if you want to avoid worrying that the money you’re spending in the early years won’t leave you vulnerable as your retirement progresses.
One of the best ways to ensure long-lasting financial security is to develop a written plan mapping out all aspects of your retirement. A written retirement plan acts like a map of sorts, ensuring that you stay on track to get to where you’re ultimately trying to go – that is, living your dream retirement. However, this can only be effective if you have a clear understanding of what you want from your retirement. While you may have broad ideas and certain things you want to accomplish, the clearer your vision is, the easier time you’ll have with your written plan.
To help you sharpen your vision for your future, here are three crucial questions to ask yourself about your retirement.
Retirement Lifestyle Question #1. What is motivating you?
As you approach retirement, take some time to reflect on why you’ve been saving money. Some people do it because “that’s what everyone does” but it’s important to think about your personal intentions for your nest egg. Are you looking to establish security? Are you planning to spend this money, or are you hoping to live off the interest only? Knowing your intentions for saving will help guide you when it comes time to make decisions about how to spend your money in retirement.
For instance, say you run an income analysis that shows you’ll have $1,500 more than you need each month. What should you do with those extra funds? Spend it having fun? Put it towards a hobby that you love? Use it to protect yourself from any financial concerns you have? Reflecting back on why you saved in the first place will help you better determine how you want to use those funds in your retirement.
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Retirement Lifestyle Question #2. What kind of legacy do you want to leave for your family?
When it comes to mapping out the finances of your retirement, you can’t just think about how you want to spend in retirement because that will be informed by what you want to leave behind. If we think back to the previous question, maybe you want to save your extra money so that you can pass it on once you’re gone. If that’s the case, then you’ll need to figure out the best way to do so, whether that’s through buying life insurance, building a Roth conversion strategy, funding a trust, or utilizing another other estate planning technique that works best for your situation.
Retirement Lifestyle Question #3. What is your long-term care plan?
Long-term healthcare is incredibly expensive, and the cost is only expected to rise. If you wait until after you retire to create a plan for how you’ll pay for long-term healthcare, then you could end up paying even more money. Or worse, find that you’re unable to afford it at all. Again, if we go back to the previous example where you have $1,500 extra dollars a month to spend, how comfortable do you feel spending that on doing something fun if you have no real protections in place for covering long-term healthcare costs?
Ultimately, when it comes to long-term healthcare, you receive the level of care that you pay for. So, while it may not seem necessary to have a plan in place if you want to ensure that you’re getting quality care and all of your needs met, as this greatly impacts your retirement lifestyle in the event of an illness or accident.
Knowing your desired retirement lifestyle.
No matter if your goal is to spend or preserve your money in retirement – or a balance of the two – having a confident retirement requires a well-conceived plan. Of course, this requires that you have a clear vision for what you want to accomplish in your retirement and how you envision your lifestyle for this phase of life. Taking time to reflect on the above questions and ruminate on your retirement goals will help make writing out your retirement plan that much easier.
At Andersen Wealth Management, we approach retirement planning with a comprehensive strategy that allows for us to create a retirement plan that will support your desired retirement lifestyle and long-term financial goals. If you’d like to speak with one of our professionals about your retirement plan, please contact us today.