Do you want to retire today?
The truth of the matter is that you can retire anytime you want. However, the big question is if you can afford it. Retirement, or planning for it takes a long time and ideally starts the moment you get your first paycheck. You simply cannot just wake up one day and decide you want to retire. Unless you just won the lottery or got your hands on some huge windfall money, you need a few decades to plan for it.
Retirement is a stage in your life you plan for well in advance. This also means that you do not take it lightly. As much as it could be an exciting stage in your life, you need to plan ahead to make it so. Simply delaying and pushing it down to the bottom of your to-do list will only make it worse. Simply put, you are delaying an inevitable stage in your life.
You might not retire today but you will retire someday. The question is not “if you will retire?” but “when will you retire?” According to the Annuity report, the average retirement age for Americans is 62 years of age. Although for most people, this could simply be a moving target rather than an absolute goal. Especially with the effects of the health crisis still being felt across all industries. Retirement seems to be out of reach for some people.
You might be nearing the average retirement age or a goal you have set in place a long time ago. The question you have now is if you can afford to retire now. Here are a few things to consider and look into if retirement is on your immediate horizon.
Check your retirement portfolio
The first thing you might want to do if you are eager to retire today is to check how your retirement savings are doing. This is where you will be getting most of your retirement income from. It will support you and help you cover the expenses you have in retirement. If you have a few places where you stored and saved and invested money for your retirement, then get a hold of those accounts.
The usual first step is getting the total amount you have in your savings. This gives you an overview of where you are with your retirement nest egg. But be very careful with this information. There are some people who might fall into a false sense of security once they realize how much they have saved up. Seeing six or even breaking into seven figures can be quite a feat.
But remember that you have to live off this amount throughout your retirement years. You might seem to have a big nest egg but once you try to use it for the next few decades, then it now becomes questionable. This is one of the reasons why you need to monitor your savings often and project your future expenses.
Do you have your retirement planned out?
If you retire today, what are you going to do tomorrow?
One of the simplest questions you can ask yourself but one of the most important as well. You could be working hard to make sure you have a sizeable nest egg in retirement. Saving as much as you can every month from your salary over to your retirement fund. You could be maxing out your 401k contribution as well to take advantage of a matching program given by your employer.
But will these preparations, did you stop and think about what it is you want to do during your retirement? Are you going to move to a different city or even a new country? Do you want to be closer to family or closer to nature? Would retirement mean a huge room full of books or a wall full of adventure photos you want to take?
Just as retirement income is important, so are your retirement plans. You need to make sure you identify them early on. This is also a crucial part of your retirement planning. You can only have a nest egg goal in mind if you are able to identify what your expenses will be in the future. If you did not save for a trip in your retirement, taking one would be tough without jeopardizing your nest egg.
Have you checked your physical health?
Your body has an expiration date and your health has a lot to do with it. As you age, your body and health usually deteriorate. More than just your age, there are a few more things you have to look at when it comes to your health. Your health plays a big role not only in how you get to live during retirement but in how you spend your nest egg as well.
Even if you are able to retire today with a huge income to support you for many years, you need to be healthy to enjoy it. You might have saved money but you’re not healthy enough to enjoy it. Most of your days are spent in bed or in hospital and doctor visits. Your body cannot take too much walking so end up at home most of the time.
If there was one huge lesson the recent pandemic put to light, it’s that your health is important. No matter how much money you have, you cannot buy time on Earth. Always make sure that you are in good health. Get some exercise in your routine and eat moderately. Regularly checking in with your doctors also helps you get ahead of any medical concerns prior to retirement.
Will your foreseen expenses be more than what you saved up?
The main reason why you need to save for retirement is to cover and pay for all your expenses during that time. It is for this reason that you need to have a clear picture of what you plan to do in retirement. Are you going to travel frequently? Put up a business you will personally devote time to? Or volunteer time and talent back to your community?
Once you have this all figured out, you stand a better chance of saving up for retirement. Knowing what you want to do will help you prepare better for it. If you plan to set up a business, you need to save up for it. Traveling might be your idea of retirement so you need to factor the costs into your retirement plan. The bottomline is to figure out what you want to do in retirement, cost it out and then save up for it.
Changes to your 401k statement
By now, you should know that your 401k statements come in each quarter. You could be receiving your copy through registered mail or online. In the past, you might just see how much you have saved in total. It might give you some false security when you see a huge amount in your 401k. But remember – it should last you all throughout retirement.
But you would notice a significant change in your 401k statement showing new a number. This is referred to as “lifetime income illustrations.” In a bid to help you plan better, this aims to give people an idea what the average amount of monthly income they would get based on the current amount of their retirement savings. This helps you gauge how much more you need to save to allow you to cover your monthly retirement expenses.
It would be amazing if you can retire today but the real question is if you can afford it.