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Easing the Transition into Retirement

09/30/2016

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4 Ways to Make Retirement Easier

It’s highly recommended by experts that you ease into retirement, instead of just quitting cold turkey. While easing into retirement and planning everything out won’t guarantee an idyllic retirement, it does increase the likelihood that you will be financially prepared for the privation of not working. Ideally, you should begin planning for retirement anywhere from 5 to 10 years ahead. These four tips covered in this blog will help your planning process and ease into retirement.

1. Know How Much You Will Spend:

How you envision your life as a retiree will determine your income. Whether you’re planning to sail around the world in a yacht or help raise your grandchildren, you need to know how much you’ll be spending. Take time to consider what you’ll be doing while retired, and once you settle on a path, start budgeting. Many retirees underestimate the expenses of retirement, and though it’s suggested that 80% of your pre-retirement income will be needed, unexpected expenses, like healthcare or other emergencies, can ruin the best laid budgeting plans. It’s always a good idea to consider worst-case scenarios when planning for retirement. Ask yourself if you have enough money to self-insure against everything that can go wrong, or will you have to buy insurance?

2. Plan Your Social Security Strategy:

When you retire, you are responsible for your own income for the rest of your life. Plan an income strategy early to avoid making costly errors later, such as claiming Social Security as the earliest possible moment. It’s advisable to do a retirement income projection, comparing the maximum versus minimum Social Security benefit. Claiming Social Security at age 61 or 62 instead of the full retirement age can lower monthly benefits by as much as 30%. You should start planning you Social Security at least 10 years before you retire. 

3. Consider Other Sources of Income:

Social security is just one piece of the retirement income — other considerations include pensions, retirement account, and your house as potential income sources. Working part-time or easing into a partial retirement are other options. You should also consider how secure your incomes needs to be. If the bulk of your money is in retirement accounts, investment planning will be crucial for a smooth transition into retirement. You also have to consider that you may live 20 to 30 years after you retire. The are so many different possibilities, and the ideal scenario will be different for everyone. The best thing you can do is to start planning early. 

4. Practice Retirement:

Based on your retirement income projections, your ideal life as a retiree (like sailing around the world in a yacht) may be off the table. However, if you work for a couple of extra years, your retirement goals could be much more reasonable. Also, once you have a general idea of how much money you need to live on for retirement, try it out before leaving the workplace. It will never hurt to live a year or two on the amount you think you need for retirement, just confirm that this is actually so. The benefits of this are that if your budget is too little, there’s still time to downsize your life, get out of debt, and save like crazy!

With these four tips in mind, your transition into retirement will be much smoother, and your life as a retiree will be closer to what you envision. Of course, these are just the beginning steps, and it won’t ever hurt to contact a professional to assist you with your retirement plans. The experts at LBMC Employment Partners are well versed in retirement planning and are eager to assist with whatever you may need. Don’t hesitate to contact your local LBMC Employment Partners representative today! We also work with FEDlogic, a value add to LBMC Employment Partners PEO, for retirement transition support. Contact FEDlogic's Frank Cardenas at 615-830-4630.

FEDlogic

Posted in: Employee Benefits
Tagged with: FedLogic