7 Questions to help prepare you for retirement
Ask yourself these things before making one of life's biggest decisions.
It's one of the most important decisions you face: When should you retire? Although there's no right answer, you might get a clearer picture when considering these questions:
- What are your sources of retirement income?
Identify all your potential income streams—retirement plan assets, investment dividends, annuities, Social Security benefits and more—and determine how much each could generate. If your income doesn’t support the lifestyle you intend to have, you may opt to work longer, save more or scale back your expectations.
- Is health insurance available?
Even if you're healthy now you need health care as you age. Medicare eligibility typically begins at age 65, but there are limits to what the plan covers.* If you have no other form of health insurance, retirement may have to wait.
- Is your debt manageable?
Before retiring, evaluate your debts. Paying off what you owe—including your mortgage—can lessen the drain on your available income in retirement. However, if your debt is manageable, you may decide it makes more sense to boost your savings now while you’re still bringing home a paycheck.
- Do you have investments that can help offset inflation?
It's tempting for many pre-retirees to reduce risk and rely on conservative investments, but you need some accounts that have the potential to grow and help your savings keep pace with inflation. Review your mix of assets, savings and investments with a financial professional to make sure you're in a strong position for retirement.
- Do you foresee continuing family commitments?
The needs of others may impact your decision to retire. If you anticipate caring for elderly parents, adult children or grandchildren, plan for those commitments before you give up your paycheck.
- Are you happy in your current job?
If you enjoy your work and it stimulates you, choose to stay in the job for a year or more to help boost your savings. Talk to your employer about your desire to continue working. You might be able to "try on" retirement by working part-time and phasing out of the job.
- Do you and your partner agree on your plans for retirement?
Choosing when to retire is a big decision. Both partners need to be on the same page—especially if one wants to continue working and the other doesn't.
To learn more, read "When do you plan to retire?" from The Principal®.
Talk with a financial professional.
Are you financially ready for retirement? Talk with a financial professional to see where you stand.
* Source: http://www.medicare.gov/what-medicare-covers/index.html