Retirement is an exciting milestone—and one that deserves ample planning and consideration. From a financial perspective, it’s essential to set a savings goal and consider what steps you’ll need to take to ensure your money lasts. But from a more practical standpoint, it’s also important to consider what you’d like retirement to look like.
Before you head out of the office for good, here are four important questions to ask yourself (and discuss with your partner, if applicable) first.
#1: What Do I Want Retirement to Look Like?
Retirement often conjures up images of beachside condos or rocking chairs on a wrap-around porch, but your retirement can be as unique as you are. Maybe you’d like to hit all the destinations on your travel bucket list, begin an encore career, move closer to your grandkids, or get involved in the community. Your vision for retirement doesn’t have to follow a predetermined path—the sky is the limit.
It is important, however, to put some thought into how you’d like your retirement to look since your dreams and ideal retirement lifestyle can impact how much money you’ll need to live life to the fullest. For example, traveling for the first few years of retirement may require you to access more of your savings upfront than if you planned on staying close to home during that time.
While your plans may change or evolve, it's wise to think about how you want to spend your time in retirement. People who don't plan ahead often find themselves surprised and overwhelmed by the amount of free time they suddenly have. Retirement is your chance to enjoy the rewards of your hard work. However, creating a fulfilling and purposeful lifestyle is crucial to avoid feelings of isolation, loneliness, and a lack of direction.
#2: How Much Will I Need to Enjoy Retirement?
When planning for retirement, one of the key considerations is how much money you'll need to sustain your desired quality of life. Working with a financial advisor can be invaluable in this regard. They can help you create a personalized income goal and withdrawal strategy based on how much you’ve saved so far, your timeline for retirement, and your anticipated income needs.
Some factors that will impact how much you’ll need to live in retirement comfortably include:
Your retirement destination: Are you planning to stay in your current city or relocate somewhere new? The cost of living varies significantly across the country, and your expenses may rise (or fall) once you retire to a new area. This could impact everything from your mortgage or rent to your utilities, transportation, insurance, groceries, and entertainment costs.
Longevity: Longevity plays a critical role in planning for retirement. Although it can be uncomfortable to consider, understanding how long you might live is crucial for creating your retirement income strategy. Reflect on your family history and personal health. If your relatives tend to live into their late 90s or you have health factors that could affect your lifespan, these considerations should influence how you prepare financially for retirement.
People are living longer today than ever, so it’s essential to consider what a prolonged life may look like for you and your spouse. Many retirees rely on guaranteed income sources like Social Security, pensions, and annuities to help ensure their savings last throughout their extended lifetimes.
Inflation: Inflation should always be a consideration when planning for retirement. While we may not always experience periods of high inflation (like we did following the onset of COVID-19 2020), the cost of living tends to increase gradually each year.
To combat inflation's impact on your purchasing power, it's wise to consider growth opportunities in your investment strategy. Including equities in your portfolio can offer potential growth, but it's essential to carefully manage the associated risks, particularly as you approach retirement. Consulting with your financial advisor can help you strike the right balance, ensuring your portfolio is well-positioned to handle inflation while aligning with your risk tolerance and retirement timeline.
#3: What’s My Strategy for Covering Healthcare?
Unfortunately, as you age, you are more likely to develop one or more serious health complications or diseases. [1] While Medicare provides some coverage, it does not cover significant expenses like long-term care.
In 2024, it’s estimated that a 65-year-old will need around $165,000 in after-tax savings to cover their lifetime healthcare expenses. [2] That’s no small chunk of change, and without proper planning, it can significantly deplete your savings or investments without careful planning. In a worst-case scenario, hefty healthcare costs could jeopardize the long-term viability of your financial portfolio.
You may want to speak to your advisor about strategies for covering your future healthcare costs, including:
Health savings account (HSA)
Emergency fund for medical expenses only
Long-term care insurance
Medigap supplemental insurance
#4: What Will My Legacy Look Like?
While you likely have many, many amazing years ahead of you, it’s still important to set time aside and consider what you’d like your legacy to look like after death. There is no time like the present to establish an estate plan, even if it’s just a will and a few beneficiary designations.
Remember, estate planning is about two primary objectives: transferring wealth or assets and staying in control of your well-being should you become incapacitated. The more you put into legally binding writing now, the more prepared your family will be to help execute your wishes on your behalf. It’s equally important to communicate your intentions with your loved ones, and give them the opportunity to ask questions or express their thoughts.
Preparing for Retirement? You Got This
As you continue growing your retirement savings and building a thoughtful income strategy, consider what you’d like to accomplish in retirement. Getting financially prepared is only half the battle—you and your partner should consider where you’d like to go, how you’d like to spend your time, and who you’d like to surround yourself with during your retirement years.
If you’d like to discuss your retirement plan or have questions about your savings strategy, don’t hesitate to reach out to our team today.
Sources:
1. https://www.who.int/news-room/fact-sheets/detail/ageing-and-health
2. https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
Russell D. Rivera, CFA, CFP®, is the Founder and President of Voice Wealth Management, an independent financial services firm serving professionals, entrepreneurs, and families in New York City and beyond. Focusing on helping clients make informed decisions about saving, investing, and financial planning, Russell is committed to providing a customized approach that reflects each client’s unique priorities and experiences.
The opinions expressed in this material are for general informational purposes only and are not intended to provide specific advice or recommendations.
This material was prepared in collaboration with Crystal Marketing Solutions, LLC, and edited using artificial intelligence, based on sources believed to be accurate. This information is for educational purposes only, does not necessarily reflect the views of the presenter or affiliates, and should not be construed as investment, tax, or legal advice.