Your odometer just rolled over to another decade and things are looking up — because retirement is on the horizon! Whether it’s just one, two or 10 years away, here are five questions to ask yourself if you’re planning to retire (hurray!) before 2030.
1. Have I Saved Enough Money To Support My Projected Lifestyle In Retirement?
This question can be pretty tricky. Doesn’t it seem borderline impossible to determine whether you’ll have enough to survive your golden years? A vast number of factors can play into the mix, including where you want to retire, what kind of lifestyle you’ll lead and how much you've already saved. Fidelity concluded that most people need somewhere between 55% and 80% of preretirement income to maintain a similar lifestyle in retirement.
Calculate how much you have saved and whether it falls between those key parameters. Falling short? Don’t worry — there are things you can do to cushion the blow if you fall short a few dollars per month.
2. Where Do I Want To Live?
Start thinking about where you want to land way before your retirement date arrives. The decision might be easy — maybe you’re planning to stay put and live out your golden years right where you raised your family. Or you might be sick of the taxes on your southern California home and may decide you’d like to move to much-less-expensive Ecuador instead.
Planning ahead can help you make the best money moves possible. Let’s say Hawaii (and its expensive lifestyle) is beckoning. You’ll need to make sure you’ve saved enough to be able to retire in the Aloha State. (Honolulu's housing expenses are 202% higher than the national average and utility prices are 89% higher than the national average, according to Payscale — just in case you’re curious.)
Moving after retirement is a financial choice — and an emotional decision, too. Can you afford to move? Are you moving further from friends and family? Think about how you’ll feel once you decide to live halfway across the country.
3. Will I Need A Side Income?
Among baby boomers (those between ages 55 to 73), just 17% have less than $5,000 in retirement savings, according to Northwestern Mutual’s 2019 Planning & Progress Study.
You may not have quite enough in the bank to make ends meet but you really, really want to retire anyway. (It’s a common story.) Maybe there’s a way around it — that’s when you quit your office job and happily work as an usher at a performing arts venue. (Other perks: Discount tickets to “Wicked” and other shows!)
Or maybe you get a part-time job at the information desk at your local hospital and enjoy the flexibility and three-day-a-week schedule. Sure beats the turmoil of your old law firm — and that way, you can still keep your income afloat.
4. Have I Figured Out End-Of-Life Planning?
Admittedly, this is way less exciting than planning which beach you’ll retire on, but it’s important for one main reason: Your family will appreciate it.
A study for Health Affairs in 2017 found that of nearly 800,000 people, only 37% of adults completed an advance directive. Of those, 29% completed living wills and 33% filed health care proxies. The rest completed a combination of these or took care of a different, unspecified type of advance directive.
Determining your wishes ahead of time and making your care preferences known before a medical crisis strikes is just good planning. Your family will also breathe a sigh of relief because all of your wishes are penned ahead of time. Check out Cake for storing and communicating your end-of-life preferences.
5. What Do I Want My Ideal Retirement To Look Like?
What’s your knee-jerk reaction to the question, “How do you want to spend your golden years?” Your initial reaction is probably the one you want to embrace. But you’ll likely need to involve others in your planning, too. Your spouse, children, grandchildren and friends will likely be curious and interested in your plans after retirement. Talk through your finances, end-of-life planning and lifestyle preferences with the important people in your life and decide what you want — together.
Know What’s In Store For Your Retirement — Ahead of Time
Your retirement may be more costly if you plan to jet-set around the world compared to staying put in the Midwest. As with anything related to financial planning, you need to think about it ahead of time. Don’t wait till you’re six months away from retirement before you plan. Think about these important questions 10 years ahead of time — if you can.