This year, approximately 77 million Americans who were born between 1946 and 1964 - aka Baby Boomers - will turn 65. That means lots of folks have dreams of retirement on their minds. But while those TV commercials make it look worry-free and so appealing - sailing off the island coast or golfing at the country club - making the decision to retire can be a lot more complicated and difficult than the ads would have us believe. Here are several important questions to ask before taking the plunge into retirement.

TUTORIAL: Retirement Planning: Introduction

1. Finances
The most important thing to consider is money. Will you be able to afford life and live your dreams after employment? If you've planned for this moment - either through 401(k) or IRA contributions, pensions or other investments - at least you've given yourself a head start. But have you devised a Plan B in the event of those investments turning sour? Recent history has shown us that the financial markets are volatile, housing is still unstable and the economy is not yet recovered. Even if you can float on tough seas for now, will there be enough for a long-term storm?

State Farm estimates that the average person will need 70-80% of his or her income to maintain their present lifestyle. Sit with a financial planner to review your personal situation. It could mean the difference between cruising cross-country in a vintage convertible and driving yourself deeper into debt. (For related reading, see 9 Things To Know About Retiring In 2011.)

2. Health
The ideal retirement plan includes being healthy enough to enjoy the time. If you haven't already begun an exercise and healthy-living lifestyle, it would be wise to do so sooner rather than later. That means, developing and maintaining a healthy diet and eating habits, making regular visits to your physician or healthcare professional, and adopting an active regimen. Your health is tied not only to your physically well-being but also your financial well-being. Health expenses can add up quickly and will significantly eat into your savings. Hopefully, you will stay so healthy you will you outlive your savings! Preparing for both can mean a healthier and happier you. (For related reading, see Health Insurance: Paying For Pre-Existing Conditions.)

3. Housing
Your children have moved out and the idea of maintaining a big home is not how you'd like to spend your free time. But what are your options? It's a buyer's market right now, so you don't want to rush into a sale. If possible, wait for the right opportunity to get the price that works best for you and your future. If and when you do sell and move to a condo or apartment, will you be able to make the emotional transition to a smaller space after living in a large home? Research "55-and-over" communities, which are designed to meet the needs and lifestyles of an older population. Another consideration in relocation is family. Can you move away from children and grandchildren without feeling that tug? (Learn how to cut your mortgage, tax, gas and utility bills. For more, see Downsize Your Home To Downsize Expenses.)

4. Your Time
You've worked your entire adult life, so you pretty much have a routine: when to rise, when to eat meals, how to manage daily chores, when to go to bed. With retirement, all that regimentation goes out the window. Believe it or not, lots of people have a hard time adjusting to a schedule-free day. Experts say one of the best moves is to stay involved somehow - volunteer, do some consulting, take up a hobby, join a club, take classes at a community school or college, even get a part-time job. In fact, according to the Centers for Disease Control and Prevention, the life expectancy for the average American is almost 78 years, which gives most of us lots of time to keep doing whatever it is we like to do.

TUTORIAL: 403(b) Plan: Introduction

5. Estate Planning and Insurance
Let's face it: none of us wants to think about the inevitable. But it will surely put your mind at ease to know that when you die, your assets will be distributed according to your wishes and no one else's. Speak to your attorney about setting up a will, trusts and custodial accounts for grandchildren and children. This type of planning will not only ensure your wishes, but it will also help save your loved ones and beneficiaries from dealing with estate taxes at the time of your death. Also, consider purchasing insurance policies that cover long-term care issues, which can protect your assets in the event of a health crisis. (For more about estate planning, see 6 Estate Planning Must-Haves.)

The Bottom Line
The decision to retire is one that should be given careful thought. But by answering some very important questions - and being realistic - your dreams truly can come true. (For related reading, see Retirement Saving Tips For 65-Year Olds And Over.)

Related Articles
  1. Retirement

    The World's Most Luxurious Retirement Destinations

    If money is no object (or if you would just like to dream), these five spots are the crème de la crème.
  2. Professionals

    How to Protect Elderly Clients from Predators

    Advisors dealing with older clients face a specific set of difficulties. Here's how to help protect them.
  3. Professionals

    Social Security 'Start, Stop, Start' Explained

    The start, stop, start Social Security strategy is complicated. Here's what retirees considering it need to consider.
  4. Retirement

    Strategies for a Worry-Free Retirement

    Worried about retirement? Here are several strategies to greatly reduce the chance your nest egg will end up depleted.
  5. Professionals

    How to Build a Financial Plan for Gen X, Y Clients

    Retirement is creeping closer for clients in their 30s and 40s. It's a great segment for financial advisors to tap to build long-term client relationships.
  6. Professionals

    Top Social Security Issues for Divorced Women

    What female divorcees need to know about the twists and turns of figuring out Social Security benefits.
  7. Taxes

    How to Tell if You Need an Estate Planning Lawyer

    Estate planning is an important and often neglected part of financial planning, which can be costly when avoided or done improperly.
  8. Entrepreneurship

    How Does ClassPass Work and Make Money?

    Find out how ClassPass makes money, how the company aims to help both businesses and consumers, and why it has been so successful.
  9. Professionals

    Top Questions to Ask When Choosing a Robo-Advisor

    Think a robo-advisor might be the right choice for you? Be sure to ask these questions first.
  10. Professionals

    Top Retirement Hack? Start with a Lifestyle Change

    Instead of going through the usual retirement planning steps, some people are focusing on fostering a lower cost lifestyle from the start.
RELATED TERMS
  1. Dynamic Updating

    A method of determining how much to withdraw from retirement ...
  2. Possibility Of Failure (POF) Rates

    The likelihood that a retiree will run out of money prematurely ...
  3. Safe Withdrawal Rate (SWR) Method

    A method to determine how much retirees can withdraw from their ...
  4. Wealth Management

    A high-level professional service that combines financial/investment ...
  5. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  6. Settlor

    The entity that establishes a trust. The settlor also goes by ...
RELATED FAQS
  1. What are the best ways to sell an annuity?

    The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
  2. Are spousal Social Security benefits retroactive?

    Spousal Social Security benefits are retroactive. These benefits are quite complicated, and anyone in this type of situation ... Read Full Answer >>
  3. What are the best ways to use your 401(k) without a penalty?

    The best way to use your 401(k) retirement savings account is to take normal distributions after you reach retirement age. ... Read Full Answer >>
  4. How soon should I start saving for retirement?

    The best answer to the question, "How soon should I start saving for retirement?", is probably, "yesterday," and the second ... Read Full Answer >>
  5. How are Social Security benefits calculated for divorced spouse?

    The maximum Social Security retirement benefit payable to a divorced spouse is 50% of the amount that would be paid to the ... Read Full Answer >>
  6. How are spousal benefits calculated for Social Security?

    The amount of your Social Security spousal benefit depends on a number of factors, including your age, the maximum amount ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!