You’ve been saving for years, and it’s finally time to retire. You have a nest egg built up, you’re in good health, and you’re looking forward to spending more time with your family. But before you pull out that crystal ball and start daydreaming about what life will be like after work, keep reading: there are some things you may not realize about retirement that could change your mind.
1. You don’t have enough money saved.
If you’re unsure how much you’ll need to retire, a few financial calculators can help. The Center for Retirement Research at Boston College provides one such calculator on its website.
The Yahoo Finance retirement calculator is another valuable tool to estimate how much money will be available when you finally stop working. Enter your age and the monthly income you expect from Social Security, pensions, and other sources, then click “Show me my nest egg.”
If the results show that even if you continue working until 62 (the current retirement age in the US), there’s still not enough money—or that they don’t consider inflation or taxes—then getting an additional job may be necessary to reach your goals.
2. You need to pay off your debt.
Paying off your debt is essential to retirement.
If you have credit card debt, it’s important to pay that off before retiring. If you retire with credit card debt, living on a fixed income can be difficult without access to a line of credit or cash savings.
You should also make sure that your mortgage is paid off before retiring. Most people will have a mortgage when they are younger and slowly pay it down as they age until they are ready to retire (unless they sell their home). If you still owe money on your home after age 55, it may be better if someone else lived in the house instead of you—especially if there are high monthly payments.
It’s also significant for retirees who own their homes outright, not just because they don’t want any financial concerns but because there aren’t many other expenses associated with homeownership once everything has been paid off.
3. You’re not sure what you want to do next.
If you don’t know what to do next, it’s time to start thinking about it. The more time you spend planning, the bigger the chance your next move will be good.
“Knowing what you want to do next is as important as knowing whether you can afford to retire,” says Retire TruNorth, a leading retirement financial advisor in South Carolina. If you’re unsure where to start, try making a list of things that interest or excite you and then see how they can lead to one another.
For example, suppose you love hiking in the mountains and have always wanted to be an archaeologist. Hiking in the mountains can lead to studying geography as an undergrad student, which can lead to earning a master’s degree in archaeology at age 25 after working as an intern for several years during school and taking pre-requisite classes during summers off from work. This is just one example of how to start planning for your future. The key is to find something you love doing and then make it a career.
4. You’ll lose your health insurance.
Health insurance is a must for retirees and is often the most important reason to delay retirement. Retirees have many more health-related expenses than younger people do—including higher rates for services and prescriptions.
Plus, Medicare doesn’t cover everything. You might need to pay for supplemental insurance or even supplemental coverage for your partner, who may not be eligible for Medicare if he/she worked in a field that didn’t offer traditional retirement benefits.
The key is understanding what’s covered by Medicare and what isn’t. The most important things you can do before retiring are to learn about your benefits and sign up for them as soon as possible. If you’re close to retirement age and still have time, consider working another year or two so your health insurance will continue into retirement without interruption.
5. Your partner has a different retirement plan.
Discussing your retirement plans with your partner is crucial if you’re married or in a long-term relationship. After all, your financial situation can affect more than just you. If one person wants to retire early and the other is willing to continue working full-time, their retirement savings must reflect their individual goals and expectations.
One partner may be willing to work longer than the other because they have no interest in retiring at 65 years old. In this case, both partners would need adequate savings to live comfortably without having a job during their golden years.
Conclusion
If you’re still unsure whether you should retire, then don’t. It’s a big decision and one that shouldn’t be made on a whim. If you feel like there are too many unknowns in your life right now, focus on what’s going well in your life right now and not so much on what might go wrong in the future. That will help keep things positive for you and your significant other.