By the time you reach your 50s, retirement is something you look forward to. You long for the days where you can stop working so hard and just enjoy life. After decades of giving your best self to a company, you’re excited about the idea of walking away from it all. Though lots of older adults dream of retirement, less than half of them across the US are actually ready.
Unfortunately, most seniors reach retirement age and aren’t financially prepared for all it entails. As such, they end up struggling financially or having to return to the workforce when they should be living out their years peacefully. To avoid such circumstances from happening to you (or a relative), review your finances while asking the question, are you really ready for this next stage in your life?
You Have Little to No Debt
During retirement, you’ll receive a considerable amount less income than you did when you were working. Therefore, you don’t want to take old baggage with you into this phase of your life. Having a lengthy mortgage, credit card debt, medical bills, and outstanding personal loans dip into your monthly retirement income reducing the amount of money you have for current bills and other interests you may have during retirement.
If you’re still struggling with debt as you’re nearing retirement it is best to clean it up now. Pull all three credit reports and review all the information. Contact creditors to set up arrangements or negotiate settlements. Even if you have to find ways to earn extra money to get those bills paid down before you retire, it’s worth it.
You Know What Your Future Expenses Are
When you’re living on a fixed income budgeting becomes essential to survival. Though there are a lot of expenses that will decrease or be eliminated once you’ve retired, there are other expenses that will increase. As such, you must make sure that you’re aware of what you’ll need to survive the next 20 or 30 years. Beyond factoring in the mortgage, utilities, groceries, and insurance, you also need to plan for things you might want to do during retirement like traveling.
If you have no idea what you’ll need on a regular basis to live comfortably during retirement then it’s time to do some research and create a budget. Write down all of your bills and the average monthly cost. Then, factor in things like going on trips, entertainment, shopping, and more. Now that you have this information, you can compare your finances to your budget to see if you’re really ready for retirement.
You Have a Plan for Financial Emergencies
As you very well know, life has a way of throwing things at you that cost you a lot of money. A home repair, the car breaks down, the heating prices rise, there’s a loss in the family, an adult child has fallen on hard times, your health fails, any of those things can happen, leaving you financially drained if you haven’t properly prepared.
It is important to know how you will handle emergencies and unforeseen circumstances after you’ve retired. This is where having a significant nest egg comes in to place. However, there are other solutions like having a credit union certificate that you only use for emergencies.
You’re Prepared for the Future
Planning for the future is still necessary for retirement. Right now, you may be an able-bodied, healthy individual. Yet, in the future, you could develop an illness, disease, or condition. Do you know how you’ll cover the medical costs? Do you have adequate health insurance? More importantly, do you have the financial means to cover long-term care should you need assistance?
These are things you don’t want to think about, but the truth is that as you age your health declines and the increased need for medical services and assistance is likely. These things all cost money that you will have to come up with. Therefore, you want to be prepared or else the responsibility falls on your children and other relatives. Look into healthcare policies for seniors and start creating a long-term care plan.
If you’ve answered no to even one of the above factors then, unfortunately, you are not ready to retire. As retirement is a significant transition, it is imperative that you do more than dream about the day you don’t have to work and start planning for it. Going into retirement with little to no credit, a sound budget, decent savings, and a plan for the future provide you with peace of mind and the means to live out your years as you please.