Retirement is just as much psychological as it is financial; the effects of which will be felt, by most, in all aspects of everyday life from socialization to diet and exercise to even the relationship with your partner. Change can be scary, but if you understand and set your personal financial goals, the potential anxiety can be seriously lessened.
Many times, it’s a matter of continuing to feel productive, and, in retirement, productivity can simply equate to remaining active. For some people it’s golfing, for others perhaps volunteering their time; keeping that drive engaged by simply being involved in something we find satisfying or that captures our attention is key to continuing the sense of fulfillment that had previously been felt through working.
Other times it’s a financial concern that scares us. What if I run out of money? Will I become a burden to my family? Many just don’t know the answer; many just don’t want to know out of fear of the answer. Again, simply knowing what options are available can help ease some of the anxiety.
Once you turn 50, you can put an extra $1000 into your IRA each year and an extra $6500 into your 401k. Great opportunities to save more while reducing taxable income.
Kids coming off the Payroll
Many people approaching retirement still have their kids on the payroll…whether that’s in the form of college tuition or continuing to help with cell phone, car insurance, or health insurance bills for kids who have already graduated. But once full (or at least partial) independence is achieved, you’ll find that you don’t spend as much as you think.
Another monthly expense that’s going away for some pre-retirees is debt payments as credit cards and cars get paid off. Or in some cases, mortgages are getting paid off.
Downsizing the Home
If you’re planning to downsize to a smaller house eventually, it might make sense to go ahead and do it now. If you end up with a smaller mortgage payment (or no mortgage at all), you’ll have more capacity for extra savings. Or if you have a lot of equity in your current home, maybe you’ll end up with a larger pool of cash to invest after downsizing.
Just because you’re almost ready to retire from your current career doesn’t mean that you’ll want to be out of the workforce altogether. You might find that you want to work part-time, do consulting, or keep working full time in a completely different field.
It’s ok to ask for help. You need someone to make sense of it all and help you understand your unique situation whether it’s financial advice, planning your estate, or setting up funds for children and/or grandchildren; the first step for any of these it to build a plan with qualified professionals.
Being realistic about overcoming the initial concerns of where you stand whether you’re looking to retire now or five years down the road is the first step. We’re here to help, but even if you choose someone else, please just consider sitting down with a professional and get started on a plan – there is no greater wealth than peace of mind.