How Do I Plan For Retirement?

There are many things to consider; finances, health care, housing, activities to name a few. To plan for your retirement finances, start now, the earlier the better. Embark on a regular savings plan, both tax sheltered and after-tax. This money will combine with social security and a pension (not many people get one anymore) to provide your retirement income. If you are young, just save as much as you can now. If you are close to retirement age, you will need to engage in some specific financial assessment. You will need about the same income in retirement as during your working life unless you plan to reduce your lifestyle significantly. You won’t have the expenses associated with employment, but you might have new expenses such as increased health care and travel. Add up all the sources of income you will have in retirement and see if it is enough. If not, expand your savings or plan on working longer.

When you are about five years away from retirement age, start to think about where you might want to live when you retire. Some people just move to a different city with a nice climate and hope for the best, then end up moving back home. A better plan would be to spend some time in a place before moving away from your friends and family. If you plan on staying in the same city, you might want to downsize to a smaller home or apartment.

What about your health care? This can be a huge expense as you get older. Will your employer provide you with health care into retirement? Fewer do than in the past. You may have to provide your own health care insurance, a cost of about $10,000 a year if you can even get it, or pay your expenses out of pocket, a risky plan. Government health care comes into play at age 65, but only covers a portion of the cost, and the future in uncertain. One good idea might be to plan on buying your own health insurance. If it turns out you don’t have to, then you are ahead. Get a complete physical five years before retirement and every year thereafter to monitor your health. Keep your weight and blood pressure down and your blood chemistry within the guidelines. Get screenings for serious diseases that need to be addressed while you are still on your company’s group health plan.

Finally, what will you do in retirement? Some people face a crisis of identity when denied the daily discipline and longtime friends of the workplace. Others have hobbies and interests that take the place of work. Many people now get part-time jobs to fill a little time and provide a little money. Start developing your hobbies early, so you will have some strong interests in retirement.