Retirement Blind Spots
Is your last day on the job going to be the best day of your life?
While many eagerly look forward to their retirement, this is not an event that you can coast into blindly without a proper plan. There are a number of retirement “blind spots” that you need to make sure that you’re prepared for.
Blind Spot #1 – Post Work Life
You may have adequately saved for your post-retirement needs but leaving work is more than simply leaving a steady paycheque behind. Work also provides people with a sense of structure and purpose as well as a place to socialize with colleagues.
Plan to fill some of your newfound free time with volunteering, travelling, visiting friends and family or even taking on a smaller part-time job. Failing to do so may leave you feeling rudderless and without direction for a period of time.
Blind Spot #2 – Longevity
Retirement plans typically assume that you need to stretch your money out for up to 20 years. The reality is that you may live much longer than that.
The frequency and pace of medical treatment developments means that life expectancies will likely continue to climb. This is great news but also means that your retirement plans need to account for this.
Blind Spot #3 – Downsizing
A lot of retirees think that downsizing to a smaller home will be the solution to funding their retirement. But doing so may not provide the major windfall that you expect.
Once you factor in transaction costs, legal fees, realtor commissions and moving costs there is often far less left over than you expected. For some, selling their home and renting may be a better and simpler choice.
Blind Spot #4 – Major Expenses
People often assume that they won’t need as much money each month once they’re retired – and this can be true for some. But many retirees want to get out and travel, play more golf and spend more time with their grandchildren instead of sitting at home reading a book all day. You may also need to buy a new vehicle or put a new roof on your house every once in a while.
A proper financial retirement plan will show you how much you can afford to spend each year outside of your normal living costs and make sure you can do everything you dreamt of in retirement without blowing the budget. A plan needs to be regularly updated to take into account your latest expenses and investment returns.
Blind Spot #5 – Your Estate Plan is Your Will
Your will is only the first step of your estate plan. While many people try to avoid dealing with their estate plan because doing so means discussing death, you really need to develop a comprehensive plan.
A power of attorney and a health representative agreement are a great second step and then a proper estate plan should be step three. A Certified Financial Planner professional can help walk you through this process.
Your retirement can and should be an exciting time for you. A well-structured financial plan will make sure that it is.