Questions, more questions and finally more questions, and no answers...
It’s Time to Change How We Talk about ‘Retirement starting with the word Itself. It’s been said going down a mountain is twice as perilous as going up it, and we find the same to be true for retirement planning. For the bulk of someone’s working career, it’s straightforward as people are in saving mode and do not think about or concern themselves with the swings of the market.
As the finish line approaches — or starting line, however, you look at it — you are now faced with converting your assets into income and making sure there is enough income to last (while keeping up with inflation) over a potentially 30+ year period. Hopefully, however, with careful planning, one can go into retirement knowing that these issues have been addressed and enjoy the retirement of which they have always dreamed.
Turning 50 often can act as an important milestone for people to really take a hard look at different aspects that may impact them In our 50’s retirement is often at the forefront of our minds as we are looking at our finances. This can be an exciting aspiration, as you get closer to retirement, the “margin for error” on planning mistakes becomes less and less and the questions to ask become more critical. Here are some questions to consider asking yourself and your Financial Advisor
1. What are my plans for retirement? Am I confident I am on the right path?
a. If I was unable to live in my current location, where would I want to go?
b. Have I considered if I could maintain a household alone if necessary?
2. Do I have enough saved for retirement? If not, with only X years left, (you fill in the X with the number of years you have to work) what course corrections must be made today?
a. Is my money in the right places? Is it diversified properly? Am I taking on more risk than I need to (or should)?
b. What are my planned sources of retirement income?
c. Do I have any sources of debt? If so, what are they?
3. What percentage of my retirement income versus expenses will be guaranteed income (pensions, Social Security, income annuities, etc.) versus drawing down assets from accounts that can fluctuate?
4. Is my estate planning up to date? Is it correct?
5. Should I have life insurance that will continue beyond retirement?
6. What type of insurance coverage do I have (life, long-term care, Medicare, Life)?
a. What might long-term care cost me down the road, and how could I handle a potentially $10,000+ per month extra bill for a couple of years, for example, if need be?
7. Is my retirement plan ready for the impact of me or my spouse dying and what the reduction in Social Security would mean for the surviving spouse?
8. Do I have a written retirement plan?
9. Am I now working with an investment planning professional?
10. When should I collect the government benefits (Social Insurance, Canada Pension, etc.)?
These are just some of the issues to consider when turning 50, or whatever age you find yourself seriously starting to consider retiring in the few years. As much emphasis is placed on saving and investing, there often are other important areas missed in planning as mentioned, such as life planning (what goals do I want to reach, what do I want to do to leave a legacy,) estate planning, life insurance and long-term care, to name a few. The earlier you start to think about these issues the better but remember it is never too late to plan. I started to plan for retirement about 11 years before I retired and was able to focus for those eight years to make my retirement what I wanted it to be.