Your retirement savings may be just starting out or could be well on the way to a million dollars. As one of the biggest fears is facing dire poverty once you’re out of your earning years, making sure that you have enough in retirement is critical to your peace of mind.
Where do you plan to live?
Location has a lot to do with your cost of living. If you’re planning a big move to a new region, carefully consider the housing costs before you get there. Other factors include:
- utility rates
- cost of transportation
- grocery prices
- entertainment options
If you move to a university town and buy a duplex, your entertainment options will be varied and your neighbor may end up paying your mortgage. If you move to a major metropolis, you may have to function in a micro apartment and do a lot of walking. Depending on the life you enjoy, either of these could be ideal or terrible.
How do you plan to spend your time?
If you’re planning a retirement of travel, you’ll need more money to do it well. For those planning a schedule full of volunteering and time with grandchildren, the cost will be lower.
For those who are already able to stick to a budget, figuring out what you need to live on every month will be fairly straightforward. For example, you will probably save on:
- dry cleaning and work wardrobe
- daily driving
- lunches out
You may end up spending more on:
- new hobbies
Be sure to over-estimate your expenses so you can have a low budget-stress level over your retirement dollars.
Are you planning on passing on your wealth?
Take a look at those you will leave behind and your plans to leave them the principal of your retirement dollars. Before retiring and moving that money, consider setting up:
- educational trusts
- transfer on death deeds
- joint bank accounts
To keep as much of your estate out of probate as possible. A will is not enough to protect your heirs and assets.
Make sure you’re also thinking about interest vs. principal when it comes to what you have saved. Having a million dollars saved up doesn’t mean you’ll have a million to spend, at least on paper. The calculation method used is critical. Living off the investment proceeds of a million dollars will net you about $40,000 a year. Will that be enough?
Will you continue working part-time or as needed?
Many people are surprised at how isolated they are after retirement. If your social life is looped up in your business life, getting a part-time job to both supplement your income and get you out of the house is a terrific option.
Additionally, working part-time may enable you to push back the time you start to take Social Security. Signing up as early as possible may be tempting, but you could face a significant reduction in benefits that will impact you for the rest of your life. If you can find a part-time job that will keep your body moving, your brain nimble and your social life growing, you may gain more than just a paycheck. Picking up a job at a craft store or a home improvement store could also increase your skillset and give you a discount on the hobby supplies you need.
A million dollars would be nice. A retirement loaded with new things to learn and new connections, as well as the time to take that dream vacation would be even nicer. Part-time work could be a flexible way to structure your days and help you transition to full retirement.