If you are retired or planning to retire in the near future, here are four questions to ask yourself to make sure you experience an Incredible Retirement.
1. How much income or cash flow will you need on a monthly or yearly basis?
I can't tell you how many times we meet with folks wanting to plan for retirement, but they haven't given much, if any, thought as to what their retirement income or cash flow needs will be. Forget about the rule of thumb stuff you've probably heard about, needing 70 per cent or 80 per cent of your earned income.
Here's a quick tip: If you haven't been keeping track of your spending – and don't feel guilty if you haven't, the majority of us don't – just take the last 12 months of your checking account statements and add up all the withdrawals and checks that have been written and that's how much money you've spent. Then subtract from that any large one-time expenses that may have occurred and now you've got at least the starting point of what your current spending looks like.
2. Are you are okay spending principal?
‘As long as we can accomplish all of our goals and not be a financial burden to the kids’ is a common comment we hear when meeting with clients.
But then a few years go by and concern sets in when the account balance is lower than what they originally started with. You need to be brutally honest with yourself, whether or not it's important for you to maintain the current balance of your nest egg. If it is, your investment strategy is probably going to have to be a little more risky compared to if you are truly okay gradually spending down your principal in a conservative and measured way, still leaving a big enough cushion.
3. How will you fill your time when you stop working?
We see this all too often, people that are unhappy shortly after retirement because they didn’t map out how they were going to invest their increased free time.
4. Have you decided when it’s time for you to stop working?
Don't retire just because society says it's time for you to retire, like at 62, when you can claim social security or maybe at 65 or 66 at full-retirement age, when you get your full social security benefit. No, make a plan and retire when you're ready to stop working. Don’t base it on some arbitrary age.
Over the years, our most successful clients who have done well in retirement, planned their retirement. They didn't let society or conventional thinking tell them when to stop working.
There you have it, four questions you need to ask yourself and have the answers to in order to move you closer to experiencing your personal version of an incredible retirement, doing what you want, when you want.