How Much Do I Need To Retire?

This is the first question that someone asked when I started the discussion about retirement savings. Most of us are unsure of how to start saving for retirement and how much we should stock up for a comfortable retirement. There are many factors that would influence the retirement savings amount, such as your current income, your monthly expenses, and your plans after retirement.

Investing in your retirement savings is simply circumstantial, and it depends on three things: time left for your retirement, how much you can save, and how much risk you can afford. There are many ways in which you can save better for your retirement. But before you start planning on your retirement savings, let’s figure out the answer to the question: “how much do I need to retire?”

Let’s get to the math!

The expert’s advice is that you should aim for replacing at least 70% (80 to 90% for a safer option) of what you’re earning now (pre-retirement income) through retirement savings and social security. In order to get the exact figure, you can use an online retirement savings calculator to do the math.

Now that you know how much you need to retire and have a comfortable retirement, it’s important to look for better ways to boost up your retirement savings fund.

3 ways to boost up your retirement fund:

A lot of people just stop at the point where they are yet to figure out “how much do I need to retire?” and the others stop at “how to reach those savings with this current income?”

It doesn’t matter how many years are left for your retirement or what is your current income, you can still find ways to boost up your retirement savings by following these 3 mentioned ways.

#1. Switch to smart saving option

One of the best ways to boost up your retirement savings is to make a smart investment. There are various options and you choose based on your risk tolerance. There are basically 2 killers that can spoil your investment plans, one obviously making a bad investment and the second is the fees. The first one is difficult to predict, but the second one depends on your choice of investment and the expense ratio.

For instance, let’s say if you invest $10,000 as an initial amount plus $5,000 per year for 30 years with returns 6% annually and has an expense ratio of 0.1%. At the end of 30 years, you will have $443,598, and for an expense ratio of 0.75%, you will have $389,240. And that leaves a difference of $54,358, which is a huge chunk. Higher the expense ratio, the lower the returns you get. So, switch to the smart saving option by choosing the investment based on the maintenance fee or expense ratio.

#2. Look for tax reduction wherever possible

Most of the retirement plans that your workplace offers, such as 401(k), 403(b), TSP, etc., comes with specific tax benefits that you can avail of. The traditional 401(k) plan comes with a benefit where your taxable income reduces by a dollar for every dollar you put into the account.

Thus, if you save $19,200 in a 401(k) account, then your taxable income will be reduced by $19,200. That implies you stock up all the money you put in and have a handful of savings. Simply, it means you don’t have to pay any taxes on the amount you save into the account that year until you withdraw it when you retire. There are other plans (Roth, IRA) as well where you pay taxes every year instead of paying it at the time of your retirement. You can learn about both the options and choose what suits your needs.

#3. Make use of the employer match fund

When you join a workplace, one of the things that wake up the thought of retirement savings is the 401(k) plan offered by your employer. The thing is that you won’t really see the difference when a part of your income goes to your 401(k) every month until you enjoy its benefits in your retirement. The additional incentive that comes along with 401(k) is the employer matching plan. In this, the employer makes a contribution to your account on top of your savings. For instance, if you put $3000 annually in your 401(k), then your employer would contribute $1500 additionally. This would help you to boost your retirement savings in the long run.

Summing up:

And now you would be able to calculate the answer to “how much do I need to retire?” Thus, you can easily move to the next step of boosting your retirement savings fund. One thing you need to remember is to add your retirement savings as a priority when you plan your monthly budget.

Important Considerations When Preparing for Retirement

Retirement planning is something everyone should consider at some point in life –the earlier the better. The earlier you start planning for your retirement in your professional life, it will allow you to lead a peaceful life post-retirement. When you wish to enjoy the perks of a successful & peaceful life post-retirement, you will have to consider several important factors.

As you start planning for your retirement early in life, it will help in buying you more time while also allowing you to build an impressive retirement corpus. Whether you are going to plan the retirement five or twenty years from now, it is crucial to offer yourself the best-available chance for securing your future financially.

While preparing for your retirement, here are some important factors to consider:

#Ensure a Proper Retirement Budget

You are well-aware of your overall expenses. You know the amount of money you would require currently for managing your essential expenses on a daily basis. Moreover, given the fluctuating rates of inflation, it is more important for you to save considerably now than when you retire.
One of the smartest ways of determining the respective retirement budget is by gathering the given expense reports and identifying the current spending. You should try to gather as many expense sources as possible to get an overall idea of your monthly expenses. When you are aware of the expenses, it turns out to be a great way to ensure retirement planning.

#Identify Your Appetite for Risks

What type of investor do you prefer being? Do you happen to be an aggressive investor not minding investing huge amounts in equities to earn higher profit margins? Or, do you happen to be a conservator investor who would not mind settling down with a low, yet steady income?
The overall risk appetite of the individual has an important role –not just for retirement planning, but for all types of investment planning. It is important to ensure that you understand the overall risk appetite before you go ahead with investing your hard-earned money into any type of retirement scheme.

#Analyze the Number of Years You Have Before Retirement

The number of years that you have in hand before retiring can be defined as the difference between the current age and the estimated age of retirement. In the given duration, you will be expected to build a strong corpus for your retirement. Investments done in direct equities could deliver higher risks to the overall return ratio.

Moreover, when you make investments in equities, your amount would be exposed to immense market volatility. Only when you tend to have ample appetite for risks, you should consider investing in direct equities. If you wish to stay away from making investments in direct equities, you can go for making investments in mutual funds. This type of investment is known to diversify the overall portfolio of the investors. Irrespective of where you are making the investment, it is crucial to deliver yourself ample years for potentially growing your corpus.

#Consider Sources of Income Post-retirement

After you retire, your monthly salary is not going to be credit to your account every month. However, there are still several other ways in which you can continue sourcing income. For instance, you can consider receiving a pension amount from the employer. You could also possess an extra home from which you can obtain monthly rent. You can also consider hiring the same as some guest facility or an educational institution for earning extra income every month.

You should consider whether or not these additional sources of income are adding towards helping you earn extra money such that you can cover unexpected expenses even after retirement. Retirement life is also known to bring unexpected expenses into effect. Therefore, you should be well-prepared for the same.

#Never Too Late for Retirement Planning

We all have gone through this situation. It can be challenging to find out whether or not you are too late with your planning. However, it is not the case with retirement planning. It is important for you to understand that you can commence retirement planning whenever you like and as per your preferences. However, if you would start saving just a few years before retirement, then you should ensure that you have ample money. This is because you are going to have just a few years left in your hand to ensure retirement planning.

#Be Debt-free As Much As Possible

If you are quite fresh to your professional life, paying off debts might appear like a cakewalk. However, later in life, you would not like to owe anyone money –especially when your retirement is quite close. It is, therefore, recommended that as your retirement is approaching, you should make sure that there are no unpaid credits or pending loans in your case. Make sure that you have paid off all your debts if you wish to lead a debt-free and stress-free life post-retirement.

#Make Investments in Limits

While ensuring maximum savings for your retirement is an important consideration, it does not imply that you should go forward with investing all the money that you have currently. It is important to note that there is no type of investment that can be completely safe & risk-free. Therefore, it is recommended that you should be aware of your investment limits while not being lured by high-end schemes delivering impressive rate of interests that are too hard to believe.
The experts recommend that you should always invest within your boundaries. Keep investing regularly and consistently such that you have the chance of benefitting from effective compounding.


Keep the important pointers in mind before retiring to be assured of a stress-free life later on. Moreover, also pay attention to start retirement planning as early as possible in life to avoid hurdles at a later point of time.

Why Is Pension Review Important?

What does intelligent retirement planning mean to you?  Having the best pension plan in place, right?

But, suppose you’re going to retire in a few months. And you discover your best pension plan became unsuitable to your current situation, many years before. You will be in a big shock, right?

Of course, it’s your pension money, and you expect the best possible outcomes from it when you step into retirement. However, avoiding a regular pension review may result in poor returns from your pension that are not even close to your expectation. You will only get disappointment and loss.

Just finding a good pension plan doesn’t mean you have secured your retirement life. You should consider reviewing it routinely to ensure the highest returns for a financially secure retirement.

Like many other people, you might be overlooking reviewing your current pension. But, you won’t again, once you know its importance and benefits.

So, before you get a sock of your life, let’s help understand why a periodic pension review is important and how you can do it.

What is a Pension Review?

It is a process of examining your current pension scheme/s to determine if it is performing well and as per your expectations. The process may include reviewing your pension funds to know

  • how much they have grown
  • how they are invested
  • how they can be compared to other similar pension plans
  • and many other aspects

Why is the Pension Review Necessary?

Pension is one of the important wealth that you have earned by working hard throughout your life. You must take care of your pension by consistently reviewing it, just the way you do for your other sort of wealth. Following are a few more reasons that will help understand the need for reviewing your pension.

1. Risk Assessment and Management

The amount of risk you can bear with your pension pot may vary on different stages of life depending on your financial situation, and other factors. For instance, suppose your funds have been performing really well for years and your retirement time is still far away. In this case, you can afford taking more risks to attain your final financial goals. Conversely, if you have lost one of your income resources (a side business) in this case, you can’t afford more risk with your pension investments. Therefore, it is essential to review your pension regularly to keep track of all risks and manage your funds according to your attitude to risk.
With a regular pension review, you can ensure that the risks are still manageable, and there will be no financial crisis at the time of retirement.

2. Check on Charges

Another most important reason for reviewing your pension is to identify if there are any unnecessary or outdated charges. Pension plans are consistently developing, and taxes have greatly reduced over the past few decades. A review will ensure that you are making the most out of your pension pot, especially if you have an older plan that has typically higher management fees than today’s plans. You can identify, amend and remove any needless charges and ensure your funds are performing at their best level.

3. Know Pension Performance

Some funds may have been performing exceptionally well when you initially set up your pension pot. But, they may have become underperformers over time and impact the overall performance of your pension plan, particularly during downturns. A regular review allows you to identify and highlight such funds that are not performing quite up to the mark. And lets you improve overall pension performance and final returns.

4. New Investment Opportunities

If you have a pension plan that sticks to the same investment approach from day one, it may not have accumulated enough savings to support you during retirement. A regular pension can help identify if your original options are underperforming and if you should switch to other options or a different pension plan.
The pension investment options are far way more than they used to be. Thereby, you can choose a better option to grow your funds at a faster rate. You can again review your pension to check on the performance of new investments.

5. Ensure a Healthy and Secure Retirement

Unless you do a regular pension review, you will not have an idea of how much money you could expect from your pension pot after your retirement. A regular pension check will help you confirm that you are on track with your retirement goals and making a healthy progression towards retirement life. Having an idea of your current pension situation will let you adjust your plan to fit your post-retirement needs and expenses. This way, you can ensure a secure and healthy retirement life.

How Often You Should Review Your Pension

As pension is a long-term investment, it requires regular review and modifications to be on track with your goals and current market situation. Though there are no fixed rules on when or how often you should review your pension, it is advised to review your pension plan at least once a year. However, the review time will depend on your current circumstances, investment options, your retirement age, and other factors. If not possible yearly, you can consider reviewing your pension pot every two years or when your circumstances demand it.

Why Seek a Professional Pension Review Service?

It is always an intelligent act to seek expert assistance rather than doing things in the wrong way and wasting time. Well, you may think you have enough knowledge to review your pension on your own. But, you may don’t know what you don’t know, which can lead to blunders and thereby low performing pension funds.

As the finance market is quite vast and fluctuating, you may not be aware of new investment options, changes in finance charges, pension rules, etc. Thus, it is wise to hire a professional pension review service or a financial advisor.

Financial advisors have thorough and up-to-date knowledge of the financial market and pensions. When reviewing your pension, they will use their expertise and find out glitches that you can’t otherwise. They will also suggest the most accurate solution as per your financial situation and needs, to improve your pension returns.

When or after reviewing your pension pot, a financial advisor will suggest your best pension schemes, mortgages, and investments options, saving you a considerable amount over the long term. They will make sure your funds aren’t eroded so much by inflation and tax. Moreover, they will save from making costly mistakes, such as falling victim to fraud and investing in an inappropriate financial product.

What Type of Pension Can be Reviewed?

Mainly there are two types of pensions:

  • Defined Benefit (DB) Pension
  • Defined Contribution (DC) Pensions

Both of them can be reviewed to ensure you get maximum benefit through them.
Talking about the DC pension, both you and your employer contribute funds into a pension pot. And the pension amount you receive depends on the amount that has been paid in, tax relief, and performance of your investments. When it comes to reviewing and switching from one pension provider to another, DC pension proves to be the simplest and most convenient.

DC pension can be of different types, such as:

  • Personal pension
  • Self-invested personal pension (SIPP)
  • Stakeholder pension
  • Pension used to contract out of SERPS.

No matter which you have invested in, you can easily review and modify your pension as per your needs.

In a Defined Benefit pension transfer isn’t as easy as a DC pension. In this, you don’t have an individual pot for you; rather you need to invest in a scheme which will pay you returns. These types of pensions usually come from large private companies and public sector jobs. And the growth of your pension funds depends on how many years you’ve worked there and your salary. You can review a DB pension, but even if you wish to move your funds, you will require a cash equivalent transfer value.

Depending on your pension type, you should consider a proper review of funds with the help of a finance expert.

 Importance of Reviewing Your Personal Pension

Personal pension falls into the category of a Defined Contribution scheme. It is a pension plan that you arranged on your own that provides you with additional funds alongside an employment pension.

A personal pension can be beneficial and valuable for an unemployed or self-employed person as it lets them contribute to their future when there is no workplace pension. Owing to this, it is absolutely essential to keep on top of the personal pension pot to ensure that the additional
investments are performing their best and offer great outcomes.

How Much Pension Review Costs?

Cost of pension review may vary depending on the adviser you have chosen, the pension plan, complexity of pension pot and other factors.
Most financial advisers offer an initial free consultation and later will cost you to continue the service. Their fees can be paid on transfer, not upfront. Many people prefer to pay them from their pension plan instead of paying directly. Usually, the fees are calculated as a percentage of the cash you wish to withdraw, transfer, or invest.

You may be thinking of a free pension review option, but remember that there is a purpose behind most of the freely available things. Many free pension review services are designed to entice you to transfer your pension funds into a high-risk scheme. Thus, you must be careful while availing any free review service or get it from a reliable provider only.

Even if you think pension review is an expensive process, it is absolutely worth it. Reason? It saves your money in different ways while ensuring you get the best retirement income and benefits.

Common Pension Mistakes To Avoid

If you wish to get the best outcomes with your pension pot, make sure to avoid big mistakes. While overlooking pension review is the biggest mistake, there many more that can affect your pension outcomes and retirement life. For instance, many people delay pension contributions, which means they do not start early pension planning. A delayed pension set up, and contribution can cost you a fortune. You may not find enough money to provide you with needed income in retirement, and you can’t help as your retirement time is quite close.

Investing in old pensions is another common mistake that can lead to financial issues during retirement. The charges for old pensions are way higher than modern pensions. Thus, if you leave money in old schemes, you will be in a great loss. You can either consider merging them into modern plans or choose other pension schemes.

One more mistake you should be aware of is falling for pension scams. Try to avoid cold-call that tries to persuade you with the offer of high-interest rates or high guaranteed returns. Pension freedoms have led to increased pension scams over the past few years.

In a Nutshell

Till now, you must have got enough understanding of the pension review concept. A regular pension review is a wise financial practise that everyone with a pension pot should consider.

Here is a quick review of reasons that make the pension review an indispensable choice for pensioners;

  • To know if the current investment options suit your acceptance of risk levels.
  • To identify if there are any additional management charges, taxes, and annual fees on your funds.
  • To know if your investment options are performing well and if you are comfortable with it.
  • To confirm if the pension savings are enough and suitable for your retirement needs.
  • To decide if consolidating frozen or preserved pensions from last jobs into one large pot would be good or not.
  • To identify underperforming investments that are restricting your financial goals.

On a Final Note!

Of course, setting up a pension pot, or reviewing it regularly is quite challenging, and a time-consuming task. However, it is of utmost importance in order to secure your retirement and leave a worry-free life. You can make this task easier and effective in different ways, such as using a pension calculator, online tools and consulting with an expert.

Planning Retirement? Avoid These 8 Mistakes For Comfortable Golden Years

Maybe that’s why the post-retirement life is called golden years! And you need to have a substantial fund to relax during these years.

Financial experts often advise saving for your retirement, right from the day you receive your first paycheck!

It’s true indeed!

At the same time, indeed we humans often make mistakes. But can we afford making mistakes while planning for our retirement?

No, obviously not! And that’s why we have listed some common mistakes which you should be aware of before planning retirement!

Here you go!

1. Not contributing enough for 401k retirement plan

Many companies offer 401k plans to their employees. So first, check whether or not your employer offers 401k! If yes, grab the golden opportunity immediately!

Many companies offer 100% employer match for your contributions. But usually the employer match is capped at a certain percentage (usually about 3% to 6%) of your pre-tax annual income.

You have to take full advantage of the employer match to reap the benefits during your golden years!

In 2019, you can contribute up to $19,000 annually to your 401k from your pre-tax annual paycheck.

But what if you don’t contribute enough to employer match?

For a year, you might think that it’s not a big loss for you. But if you see from a larger perspective, you will be losing a larger amount! Because you will miss the benefits of compound interest calculations, where you can earn interest on top of the interest you have already accrued!

According to a 2014 report by Financial Engines, people who missed out on $1,336 in employer contributions in 2014 will lose almost $43,000 over 20 years!

So, work hard and contribute to your 401k keeping the employer match in view!

2. Quitting a job before vesting

It is always advisable to make regular contributions to your 401k. And contribute at least the amount which matches your employer contribution.

If you are young and have started saving for your 401k, contribute to your 401k as much as possible!

But before we proceed, what is vesting?

It’s a term to mean how much of your 401k fund you can take if you leave the present job. Precisely, vesting in a retirement plan means ownership.

Well, the money which you have contributed is yours! But there is a catch in the employer match fund!

Vesting policy depends on company to company! In most cases, the policy ranges from about 3 to 7 years to be fully vested in 401k.

So before you plan for your job switch, go through the vesting policy of your company. You may coordinate with the human resources department to get a better picture of the vesting policy of your company!

But you might be in a limbo thinking, how vesting can hurt you?

Scenario 1: Let’s say your company has a vesting policy that increases the amount you are vested in your plan each year by 25%. That means you will be fully vested after working at the company for 4 years.

So, if you are planning to leave your company after 3 years, you will be 75% vested. In other words, you can carry 75% of your employer match contribution!

Scenario 2: Let’s say, your company has a stagnant vesting policy. That means, only after working for a certain period, you will be eligible for vesting. In that case, you may lose the whole amount of your employer match contribution!

So, before you switch jobs, check your company’s vesting policy about 401k!

3. Taking out a loan from a retirement account

Going through a financial crunch?

These are worth enough to tempt you to take out a loan against your 401k retirement account!

  • No loan application required
  • No minimum credit score needed
  • Pay off the loan within a maximum term of 5 years.

But why shouldn’t you borrow from your 401k?

Affects your paycheck: You have to pay off the loan through payroll deductions every month. So, you may see a large part of your paycheck going towards repaying your loan. And if you are already on a tight budget, you may find it more difficult!

Hurts your retirement nest egg: You won’t earn any interest on the amount you have opted for a loan. Besides, some 401k plans don’t allow you to contribute till the time you pay off your loan fully! Whatsoever, you are saving less or no money in your retirement fund, which affects your golden years!

You have to pay double taxes: Yes, you heard it right! You have to pay double taxes on your 401k loan. How so?

Usually, loan payments are made with the money after paying the required tax. And taxed for the second time when you will receive distributions during your retirement.

Affects your financial life: If you haven’t paid off your loan fully and have left or lost your job, you might be in a big mess!

You have to pay the outstanding balance amount within 60 days of your last working day!

So, always consider borrowing from your 401k as the last option to revive your finances. Because it drastically reduces the chances of your retirement readiness!

4. Cashing out your retirement plans

Contributions to your 401k are tax-deferred. In this year, you can contribute up to $19,000 to your 401k account. You don’t have to pay any tax on your contributions.

And you can contribute up to $6,000 this year into your IRA account. In this case, you need to pay taxes while making contributions to your IRA.

However, if you pull out money, before attaining 59​1⁄2 age, from your 401k or IRA, you have to pay a tax to Uncle Sam! Apart from that, you also have to pay a 10% penalty if you withdraw funds before attaining the above-mentioned age.

5. Not thinking wisely before rollover

A “rollover” means moving your retirement funds from one plan to another. Let’s say you are switching a job and willing to transfer your 401k funds to your new employer or move into IRA.

What if you have taken out a loan from your retirement account?

In that case, you should know about the 60-day rule before you opt for rollover. As we have discussed earlier, you have to repay the loan within 60 days if you are leaving the job. If you can’t repay your loan, you need to pay taxes along with hefty penalties!

Besides, your employer will withhold 20% from your account to cover potential taxes and penalties if you take possession of funds (that is, you have kept the loan amount with you).

You have to repay the amount from your own to bring up your account to the previous level.

Let me explain to you with an example!

Let’s say you are rolling over your 401k into an IRA by taking possession of funds. And you have:

Funds in your account = $20,000

Employer withhold (20%) = $4,000

Remaining funds in your account = $16,000

So, you need to pay $4,000 from your pocket to start your IRA.

Else, you can start your IRA with $16,000 only. But the withholding amount will be treated as an early withdrawal!

However, if you open a new account with $20,000, you might get back the withhold amount after filing income taxes!

6. Not mentioning the beneficiary name

You must be working hard to save for your retirement. That’s why it’s equally important to protect your assets even when you are not here.

So, you need to name your beneficiaries for your retirement account! If you don’t, your retirement funds will go to your estate being subject to probate. A probate is a legal process to check the validity and authenticity of a will. And this legal process is often lengthy and complex!

So, always update your beneficiary information because your will is even powerless over your retirement account.

7. Retiring with debts

According to the 2016 Federal Reserve’s Survey of Consumer Finances, 70% of the households in our country headed by people of ages 65 to 74 had at least some debts!

Paying off debts after your retirement is quite tougher than you think. The high Annual Percentage Rates, finance charges, etc. make you fall into the debt trap.

So, if you have taken out any loan during your active work-life, pay it off before you retire! And start paying off the bad debts first!

Let’s say, you have credit card debts. As obvious, you don’t use your credit cards for buying appreciating assets. You may use it for depreciating purchases like home furnishings, clothing items, gadgets, etc. So, the high-interest rates and low minimum payments make your credit card debts cumbersome!

However, credit cards have their benefits like reward points and all. But make sure to use them wisely. Otherwise, you may end up getting trapped in debt burden!

If you are already in the debt trap, opt for a suitable debt relief option to save yourself from it.

And start following effective ways to save for the future from now only. Always remember, being financially independent doesn’t necessarily mean to retire early. It means to get out of a 9 to 5 grinding job and do what you wish to!

8. Not being able to estimate retirement savings

“How much do I need to retire?”

Most probably this is the first question which comes to your mind while talking about retirement planning!

Well, you can follow the 4-percent rule! The rule of thumb says to find out your annual spending and multiply it with 25. The resultant will be your magic number. The magic number ensures that you can safely withdraw 4% of it every year after your retirement. Let’s say, your current annual spending is $50,000.

Therefore, your magic number will be $(50,000*25)= $750,000

So, $750,000 will be your target to save for your retirement to safely withdraw 4% every year!

You may follow another strategy to estimate your retirement savings.

According to the retirement planner Fidelity Investments, it’s advisable to save 10 times of your post-tax income if you want to retire by age 67.

It has chalked out a timeline to reach the magic number! Let’s see!

  • By 30: Have the equivalent of your salary saved
  • By 40: Have three times your salary saved
  • By 50: Have six times your salary saved
  • By 60: Have eight times your salary saved
  • By 67: Have 10 times your salary sav

If you are planning to become financially independent, you have to do some calculations! The calculation of financial independence (FI) has two parts.

The total amount of money required to have a sufficient income for life is your FI number.

FI number = Yearly expenses/ Safe withdrawal rate

The second part is how many years it will take to reach FI!

Years to FI = (FI number – amount already saved) / Early saving)

However, whatever strategy you follow, make sure to invest in your retirement accounts regularly, to grow your money for your golden years.

Is It Time for You to Retire?

So, you’ve reached the later years of life. Or, at least, that’s what they tell you. Your hair is greying and your hairline is possibly receding. You’re starting to notice aches and pains you’d never even thought about before and you find yourself bringing up your back problems at Sunday lunch with the family.

And you don’t necessarily feel old. In fact, you probably feel most in control of your life than you’ve ever felt before. You know who you are and what you want. You no longer feel anxiety over silly things like you did when you were younger. Despite the physical indications of age, you’re not nearly ready to identify with the term “elderly”.

Middle age is in the rear-view mirror and you’re all the better for it. You don’t know why you ever dreaded getting older. You finally know what you’re talking about and have the knowledge and experience to back it up. It’s a wonderful time of life.

But there is also one big question that’s probably lingering at the back of your mind: is it time to retire? Retirement is known as the “golden years” and you’re becoming more and more intrigued by it. You likely have friends who’ve already taken the plunge into post-employment. And you have to admit, their lives look pretty good from the outside. But, are you ready to commit to giving up work permanently?

Well, here are some points to consider and questions you should ask yourself to help you make this big decision of your retirement.

The positives

More free time – This means you have the time to enjoy all the things you never had time to do before. You can spend Monday mornings playing bridge, relaxing on the golf course or reading a good book. If you have grandkids, you’ll have loads more time to play with them and give them advice. You won’t have to live according to your work schedule anymore.

Less stress – No matter what you do for a living, every job comes with a varying amount of stress. You have to worry about getting everything right all the time and consider the results of every action you take. Plus, at the level you’re most likely at, you can feel the next generation wanting to take your place. When you’re retired, you have very little to worry about. There’s no reason to lie awake at night thinking about clients and customer retention.

You can focus your energy on whatever interests you – Let’s not pretend you’ve got an unending surplus of energy. You’re still awake from morning until night and you get through the day without an issue. But you may find you have to choose what to focus on. It’s not like the old days when you could seemingly think of 100 things all at once. Now you only have the energy to think of one or two things at a time. Being retired means you can finally focus all your energy on the one thing you want to. Whether that’s your family or a special hobby, it’s all up to you.

The negatives

You may become bored –  Right now you have the perfect balance of responsibilities, family and interests to take up all your time. Every waking moment has something assigned to it. And let’s be honest, work takes up most of your time. Which is why you’re able to to enjoy your other interests. If you don’t have enough outside of work to keep you busy, you may find yourself bored without work to keep you occupied.

It makes a big difference financially – For many people, the lifestyle they’ve become accustomed to is based on their current income. No matter what you’ve saved or put away for retirement, you’re unlikely to be able to live the same way you’re living now on a pension. You’ll most likely have to cut back on expenses.

You could feel lost at first – Your priorities drastically change when you retire. The things you care about and the tasks you put first change. Work is a big part of your life and when you stop working, that part of your life disappears. If you’re someone who has always gained a lot of their self-worth from their job, then you could feel like a fish out of water for the first few months of retirement.

The two questions you need to ask yourself before you retire

Are you ready to give up your career?

There are many people who become very attached to their jobs over the course of their careers. A large part of who they are is rooted in what they do for a living. It’s not entirely healthy, but it’s not uncommon. If you are, or have been, one of those people, you need to make sure you’re ready to leave your career. Have you made it as far you’d like to? Is there more you’d like to contribute to the business or industry? Those are some of the things you should think about.

Do you have the finances to live comfortably in retirement?

It’s important that you take a close look at your finances before you retire. Some people start their retirement savings early on in life to ensure a comfortable lifestyle later in life. They added to the pension funds or retirement annuities their employers set up for them (if they received that benefit) and were careful with their spending. Are you one of those people?

However, before you get unnecessarily stressed about the financial implications of retirement, remember that there are ways to save on your current expenses. Once you leave the working world, you will find that there are discounts and special offers available to you. For one thing, you can easily find affordable medical aid for pensioners.

At the end of the day, everyone has to retire eventually. You simply can’t work forever. You just need to decide if retiring is something you want to do right now. So, take some time to carefully consider the positives and negatives of stopping work.

Keeping Up with the Times: Retiring in the 21st Century

What comes to mind when you think of the word retirement?

Sipping cocktails on cruise ships, spoiling and spending more time with grandchildren, gardening in the afternoons, unlimited golfing opportunities—this was the usual picture painted by people when they think of their retirement decades ago. Many of us still do, but thanks to multiple factors, retirees are now redefining what retirement means. Yes—pressing concerns, such as retirement funds and long term care options, are still present, but so many people are now kicking the old definition of retirement to the curb.

Retirement Planning

There is nothing wrong with putting your feet up and spending time enjoying the fruits of your labor. Take up hobbies. Travel around the world. After all, retirement means differently for everyone. However, a huge portion of retirees now is staying active in their chosen fields.

We have the older generations remaining in the workforce or exploring new passions. We find them joining new business ventures and switching career tracks. We used to see the 50s as the decade of winding down and preparing for retirement. Nowadays, people in their 50s are remaining steadfast and formidable forces in the workforce. The 50s are now the decade of second wind and they are not slowing down.

Longer life expectancy, improved health care, and increased awareness in living healthier lifestyles—these are just some of the reasons why the definition of retirement is being altered. Americans can now expect to live until their late 70s while a century ago, the average person only lived up to 47 years old.

While longevity is a feat that should be celebrated by everyone, not many people were prepared for it. This is why updating your retirement plan has become a must. While many of us are no longer caged by deadlines and 9-5 work shifts, we need to shift around and adjust a few aspects in our lives to keep up with the changing times.

#1 Update your funds for the extra years

First, let us start by going back to the previous statement where retirees are refusing to sit still and spend their golden years resting. This may be out of need or pure refusal to downtime, but seniors are remaining more active than ever.

While some are staying in their fields as veterans, there are those switching careers. They see this as a second chance to explore options and interests that were not available back in the day. 

The great thing about this change is that the older generations get to have more years contributing to their savings. Instead of beginning to spend what they have saved, seniors have more years and more opportunities to increase their savings, especially when relying on Social Security benefits has become too risky.

#2 Volunteer!

If volunteering was not in your plan before, then this is your chance to make room for it. Serving the community benefits not just the community but the volunteers, as well. People who join volunteer programs are more connected with society. The sense of purpose it provides improves their mental health and quality of life.

There is a wide range of activities that individuals can choose from—babysitting for the couple next door or assisting at the local animal shelter. Communities offer volunteer programs that you can take part in.

#3 Improve your health and long term care coverage

Long term care and healthcare coverage should be staples in any person’s retirement plan, updated and otherwise. So many things are changing, from the retirement age to the activities you busy yourself with, but these plans are always permanent.

Longer lives could mean more sick years for some individuals, and with that comes a different set of financial problems that no one really had to deal with a few decades back. We have seniors finding themselves unable to pay for their long term care or their medical needs. We have older generations outliving their savings.

Make adjustments to the plans that you have. If you already have a working policy in place, then speak with your long term care agents about updating your plan. If you have not secured a policy, then speak with LTC insurance companies about possible options.

The Bottom-Line

There is no handbook on how to successfully plan your retirement, but there are plenty of guides. What works for many may not work for you. If you prefer the traditional type of retirement and there are no repercussions, then do it. If you prefer the newer definition of it, then do not hold back.

No one understands your needs better than you do so plan accordingly. If you do need a break from working then take a break. Retirees are also enjoying mini retirement years where they step away from working once in awhile. Keep your health up and maintain an active lifestyle. Enjoy your golden years the way you want it, but be smart about it.

Violet Swenson is the Online Content Director at LTC Global Agency. She has thrived in the insurance and retirement field for several years. Her career revolved around helping people strategize for long term care and prepare for their golden years through insightful articles relating to long term care insurance, long term care, retirement and finance.

The Key Factors of Your Retirement Plan

Have you ever worked on your retirement plans? If not, it is not too late. At this ever rising Inflation If you expect to retire at age 65, then you have to account for prices to double while you’re working and during your retirement.

Here’s how you can protect your future from the destructive power of inflation.

  • Make sure your retirement plan must calculate inflation costs into it
  • Invest wisely: invest your money into money market funds or CDs to protect your principal
  • Remember that your retirement date isn’t the end: After retirement you must monitor and control your money.

Share your retirement plan with us.