Preparing for retirement should begin as early as your 20s. The best advantage you can utilize for your retirement planning is time - so the earlier you start, the better. If you’re not in your 20s anymore and haven’t started your retirement planning, that’s okay. It’s also never too late to plan for your retirement.
If you want to successfully prepare for your retirement, you have to create a plan. Planning how you’re going to save your money, where you’re going to invest it, and how you’re going to spend it during retirement are all very important things to decide. But there is more to retirement life than how you will handle your money. Here are three ways to effectively prepare for life after retirement. (For more, see: Life After Retirement: Is Money Really the Priority?)
Determine Your Purpose
Once you retire, your life is going to change dramatically. You will have a lot of time to fill and a whole new structure to your days. You need to ask yourself what your mission is for your retirement. What do you want to do/how do you want to spend your time? What kind of person do you want to be during your retirement? We recommend finding a hobby you enjoy or signing yourself up for volunteer work. Establishing the answers to these questions will give your retirement years a purpose and motivation that will keep your days filled.
Save Your Money
When we say save your money, we don’t mean simply throw the extra cash at the end of the month into a savings account and hope it will prove sufficient when you stop working and step into retirement. In order to save for retirement, you need to determine what style of living you want to have after you retire. Do you want to live luxuriously, traveling from one expensive city to another, or do you want to buy a simple beach house and relax by the ocean every day?
Determining your lifestyle will help you understand the amount of money you will need to support yourself during retirement. Saving your money effectively also requires investing. Your 401(k) will most likely not be enough to support you throughout your entire retirement, so you might want to consider investing your money in another type of retirement account as well.
Define Your Relationships
The relationship that will change the most when you retire is your marriage. Whether you and your spouse are both working, or just one of you, you will both need to learn how to adjust to seeing each other more often. It can be difficult to transition from being apart most of the day to spending every minute together, so we recommend talking about it.
Be open with one another so that you are on the same page come the time when you both retire. Another topic to discuss with your spouse is which of you will retire first. Oftentimes, couples cannot afford to retire at the exact same time, so we advise deciding who will remain in the workforce and which of you will retire before the decision needs to be made.
Planning for retirement is not all about finances. It is also crucial to determine how you will spend your time, the lifestyle you wish to live and the impact on your relationships. (For related reading, see: Retirement Hobbies That Make Money.)