Retirement is the beginning of a new phase of life. There will be changes, that is certain. In the years before you clock out for the last time, it’s vital to evaluate whether you’re ready to pursue the life of retirement you’ve envisioned for yourself.
Do you want to travel? Perhaps you hope to spend more time in your garden? Maybe you’re thinking about downsizing? Whatever your dream of retirement, it’s important you plan for it. Keep reading to find out several things you should consider before retiring.
1. Let Your Home Equity Work for You
Once you reach the age of 55, a couple of options become available to you that gives you access to the equity in your home. Equity release, reverse mortgages and other financial strategies allow you to leverage the equity you’ve built up in your home to support your lifestyle and lead a comfortable retirement. Make sure to investigate all options thoroughly to ascertain which, if any, are consistent with your long-term goals for retaining ownership of your home and/or bequeathing it to your loved ones down the track.
2. Your Retirement Budget
Your retirement budget is likely going to be different from the expenditure patterns you have right now. While some things like food expenses remain, vehicle, medical, insurance, clothing and other outgoings may all fluctuate considerably in either direction as you age. Don’t forget to factor in leisure expenses. With more free time on your hands, there’s a strong possibility that sports, recreation and other costs will increase. Forgetting to account for these can leave a gaping hole in your figures.
3. Getting Rid of Debt
Ideally, you’ll want to head into retirement as debt-free as possible. It’s best to work on getting rid of your high-interest debt first. Credit cards typically have the highest debt ratio followed by car loans. Leave your mortgage for last as it usually has the lowest interest rate of all typical debt. If you do run into short-term financial difficulties, many retirees may qualify for small cash loans offered by non-profit or community-based microfinance institutions. These may be worth researching as they can be a much safer alternative to high-interest credit cards or other predatory lending practices.
4. Your Health Insurance
Throughout your working career, you probably gave little thought to health insurance because your employer provided it and the premiums came directly off your paycheck. Easy-peasy, right?
Well, now that you’re planning to retire, you’ll have to consider your health insurance needs very carefully. You’ll qualify for Medicare at age 65, but will likely still need supplemental insurance besides. If you’re retiring early, you’ll need to make sure you have enough cash flow to pay for an individual health insurance plan on your own.
5. Your Housing Situation
If you’re planning a home renovation before you retire, consider adding things like lever doorknobs and faucet handles to make them easier to operate as you age. If you are remodeling your bathroom, think about a shower with a lower threshold as well as adding a shower seat.
If you’re planning to move, you may want to buy a home that’s all on one level to avoid having to traverse stairs in your golden years. Another option many seniors find appealing is downsizing since there’s less maintenance involved and since there’s not enough room, grown children can’t return home to live.
Retirement is the beginning of an entirely new lifestyle. There are many things to consider and prepare for the most-extended vacation of your life. Keep these factors in mind as you plan for your own impending retirement.