You’ve saved well, invested wisely and built a sizeable nest egg. Retirement is within your grasp – or so you think. Here are 10 thought-provoking questions to help you determine your readiness to retire (whatever retirement means to you).
1. When do you want to retire? In a year? Six months? At a particular age?
In retirement, you’ll experience a fundamental shift – from saving to spending. The timing of your retirement is crucial to building your retirement nest egg and assessing how long it will need to last.
These 10 questions can be your roadmap to becoming retirement ready.
2. What percentage of your current income do you expect to need in retirement?
The amount of your current income you’ll need in retirement depends on how much you plan to spend in retirement. Plot out your current budget, then create a projected retirement budget and see where the gaps are.
3. How do you plan to spend your money in retirement?
Think about your current spending habits. Are you a penny-pincher or a lover of luxury? These habits will be amplified in retirement, so make sure your savings reflect this. Don’t forget to plan for events that may be out of your control.
4. Have you considered your lifestyle needs in retirement?
Travel lovers, take heed. Your lifestyle needs in retirement play a big part in how you save. For example, buying a condominium and being saddled with condo fees may not be the best idea if you plan on travelling extensively.
5. What guaranteed sources of income can you count on in retirement?
Calculate how much guaranteed income you’ll receive during retirement – such as Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) payments. Then, determine how much additional income you’ll need and where this will come from. While investment income is a nice bonus, you shouldn’t rely on it to pay for necessities.
6. Do you plan to work part-time or full-time in retirement?
Perhaps you want to continue using your existing work skills or explore new career opportunities. Debt and family matters may also influence your decision.
7. How do health and wellness factor into your retirement plan?
Retirement is the perfect time to focus on your mental and physical fitness. Leave room in your budget for activities that exercise your mind and body – the good news is that many of them are free!
8. Are you ready for the unexpected events in life?
When you consider retirement planning, make sure to account for unpredictable events – both financial and personal. Check if your retirement savings are strong enough to support you through a future economic downturn, a rise in the cost of living and a long life.
9. How will you keep your money working in retirement?
Think about how you’ll keep your money growing. Talk to me about investment solutions for retirees.
10. Do you plan to leave a legacy?
You might want to leave an inheritance to your family or favourite charity. Once again, I can help you put this in place.
The answers to these questions can help form a dependable roadmap for your retirement. While you can’t predict the future, you can plan for it.