How Can I Be Successful in Retirement?
Planning for retirement is like putting together a financial puzzle. There are a lot of pieces, considerations and moving parts that you must evaluate. At North Main Financial we work with our clients to help them map out their path to retirement based on their goals, needs and wants. While it may seem daunting, it’s not impossible.
For many folks, planning for retirement is in the future. However, you may also be at the start of your career thinking that retirement doesn’t apply to you. But it does. You still have the benefit of time and planning and can adjust your plan. But for many of us, we’re looking at that time in the somewhat near future.
We’re going to be looking at some considerations as you start to think about that next season of your life. If retirement is in the not too distant future, what are some of the first things that should come to mind. Each person’s space is unique but let’s look at a few things we see most often.
What income looks like in retirement.
For most of us, we’ve worked for a larger employer or somewhere with a steady paycheck every two weeks for most of our lives. We have cultured ourselves, from a planning standpoint and budget standpoint, to live into that kind of space. It could be not only for years but perhaps for decades. As a creature of habit, we begin to adopt a certain way of budgeting for things and a certain way for planning for things on a monthly or annual basis. When we think about this idea of retirement it’s very likely that this process will need adjusting. So, how does it look? What kind of changes are you going to have to make?
There are a lot of variables and a lot of moving parts that factor into it. There is a change from receiving a paycheck every two weeks from your employer to then looking at the possibilities of social security income if you’re are age 62 or older. And then perhaps using a portfolio to replace part, if not all, the income you had when you were working. If you have been working for middle to larger size employers and have been receiving consistent paychecks, receiving contributions to retirement accounts, and receiving insurance benefits, etc. the shift to being self-sufficient can be a little jarring. We see that at North Main Financial very often.
Sometimes when we are looking at a client’s situation one of the first things we tell them is to pause for three or six months without making any significant financial decisions. This gives the client the opportunity to see how their financial space in retirement comes together. Meaning let’s not sell the house and move to the beach right way, let’s not go buy the fancy red sport car right way, just get adjusted to the space first. Also, if you retire and are younger than 65 you may be in a space where you are needing to allow for your own health insurance. Paying for your own health insurance after having your employer pay can be an eye-opening experience. Sources of income are going to change as you enter retirement.
How multiple insurances are going to look.
On the life insurance side, it may not be as big of a concern as it was earlier in your career with young children and other dependents for which you may be responsible. Especially if you are the primary or sole earner in your family. As we get close to retirement there may be reasons to keep life insurance due to estate planning or tax purposes for example. You want to make sure that you have a healthy understanding, especially if life insurance was offered as a benefit through your employer, of what that looks like when it comes to portability.
You may have had the opportunity to be a part of a group life insurance policy. If you were to pass away while that policy was in place and were working for your employer, your dependents would be able to receive those benefits through your employer. Does that insurance just end with retirement? In many instances that is the case. There may also be the possibility for portability. Meaning you may be able to convert your coverage under that group policy to a personal or individual policy, but you want to make sure if that makes sense.
Another thing to think about is health insurance. As you know we are living longer. Medicare, or the opportunity to be a part of the Medicare insurance system, is not a possibility for many folks until you reach age 65. If you are in your mid to late 50’s or early 60’s, thinking about retirement then very likely, not always, you will need to think about how you are going to handle a health insurance policy between retirement and the time you will be eligible for Medicare. Should you look at an individual policy or family policy or do you self-insure. Should you look at a part-time job with an employer that offers health benefits to part-time employees. With the latter, you often must be with the company for a year before it kicks in, but we are seeing this with more frequency.
Once you reach age 65 you are eligible for Medicare. However, many people choose to also purchase supplemental insurance to cover the gaps. There are a lot of things to consider here.
Working in retirement.
In this day and age, we are living longer. For many of us, where we aren’t involved in heavy labor kinds of industry, there is more of a life expectancy on the other side of what we sometimes term more formal retirement. For folks who are retiring in their 50’s or 60’s it is very common to do planning to the late 90’s or 100. We have a higher frequency of people living to 100 than any other time in recorded history.
For many people this is becoming part of the planning process. Implementing the idea of looking at part-time work or supplementing income for a period of time. Those work spaces are not nearly as intense or as involved as was early in our careers. It could be something along the lines of what you want to do, not what you need to do. Retirement is keeping in line with what you want to do, not what you have to do.
As you can see, retirement is a vast landscape of opportunity and everyone’s map is different. And no matter your age, it’s never too early or too late to plan for retirement. The most important thing to do is get started and begin understanding your current situation and where you want to go. But know that you don’t have to go it alone. We are here to assist with any questions you may have and welcome the opportunity to help guide you through the peaks and valleys of your landscape.
Interested in hearing more about this topic? You can listen to the full episode of the North Main Financial radio show on WSIC by clicking here: Can I Retire – 1/19/19.
If you have questions about what retirement looks like for you, or would like to talk with us further about our services, give us a call at (704) 987-1425 or visit us at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.
These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.