4 Questions to Ask Yourself About Retirement

Retirement

4 Questions to Ask Yourself About Retirement

Posted by Infinite Wealth Advisors, LLC
4 years ago | September 14, 2015

Senior Couple Enjoying Romantic Beach HolidayDeciding when to retire is one of the most difficult decisions you will ever make. It’s also one of the most important. The timing of your retirement will depend largely upon your personal financial situation, but also upon your expected lifestyle and even some amount of luck.

There is no answer that is right for everyone, but asking yourself these four questions can help you to choose the right time to retire.

What type of lifestyle do I expect in retirement, and how much will it cost? Do you own your home outright, or are you still making payments? How much is the upkeep? Do you expect to travel or enjoy certain hobbies? What about regular monthly bills, food, and a stash of money for an emergency? Don’t forget that medical expenses will increase as you age, and factor in the cost of inflation. Over ten or twenty years it will make a difference.

What is the source of my retirement income? Your Social Security benefits will be less if you retire early, and greater if you retire late. But what about other forms of retirement income? Have you purchased an annuity to provide a guaranteed stream of cash? Do you expect to have a pension from work, or did you set aside money in a retirement plan? Talk to your financial advisor about how much income you can expect from each source. Ask yourself whether you would be willing to work part time in order to earn extra income in retirement.

Will my income cover my expenses? After answering the first two questions, you should be seeing a positive or negative balance on your expected monthly budget. If it’s positive, you might be getting close to retirement. If it’s negative, you can keep working, find a way to increase your retirement income, cut back on your expected lifestyle expenses, or talk to your financial advisor about other options.

How many years can I afford? Even if your budget came up positive, how long will your income stream sustain you? Are you prepared for enormous expenses, such as long-term nursing care? The last thing anyone wants is to outlive their money. So while you calculate how much money you have, remember to estimate how long it will last.

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