7 Retirement Questions to Answer if You’re 50 or Older

Bob Carlson

7-retirement-questions-to-answer-if-youre-50-or-older

Successful retirement has a blueprint.

Whether you are already retired, or retirement is years away, you can follow this blueprint to enhance your financial independence.

You should have a written retirement plan. Developing a plan requires you to carefully consider key issues, and surveys of retirees show those who had written plans are more satisfied.

A plan reduces uncertainty, and it gives you reasonable expectations.

Those without plans “learn as they go.” They make more mistakes in the early years of retirement and require more frequent and dramatic changes as time goes on. They often have unrealistic expectations about retirement.

A plan for successful retirement must answer crucial questions. I’ve stripped retirement planning to its essence and determined the questions that must be answered. That is your blueprint for retirement.

#1 When will you be ready and able to retire?

Age shouldn’t determine when you retire. You need to be ready and able.

Retirement readiness is a state of mind. Being ready means you are content to leave behind your workplace, including colleagues, structure, the sense of purpose and the activities associated with it. You’re ready to spend more time on other activities.

Being able to retire means your income and assets are sufficient to allow you to stop working. Answering the questions in the rest of this article will help you be able to retire.

Of course, the transition to retirement doesn’t have to be abrupt. More and more people find a gradual transition is better. Over months or years, they reduce working hours or increase vacation time, often by changing jobs.

Unfortunately, the retirement date isn’t always in your control. When you’re more than a couple of years from retirement, your plan should include a contingency that you might retire before you intend to because of health or layoffs.

Exclusive  Holiday Shopping: Scoring Big Profits

#2 How long will retirement last?

In other words, what is your average life expectancy? Your plan will be very different if your life expectancy is 10 years, rather than 35 years.

Most people underestimate average life expectancy. That makes for a bad retirement plan.

If you’re married, a related question is, how long will you live together? Income and expenses will change after one spouse passes away. The plan should anticipate this event

#3 What will you do in retirement?

This is a sneaky way of determining how much you’ll spend.

As I’ve said in the past, don’t make the mistake of using a formula or rule of thumb to estimate how much you’ll spend in retirement. Develop a personalized spending estimate based on your interests and planned activities. Decide the lifestyle you want in retirement, including where you will live, and estimate its current cost.

Keep in mind that spending doesn’t stay the same; it’s adjusted for inflation, year after year. Most people spend less as they age, because they’re less active and have done those once-in-a-lifetime activities.

For most people, spending steadily declines after age 75 or so, and might increase later in life because of medical and long-term care expenses.

After estimating the spending and looking at your sources of retirement cash, you might need to modify the expected activities to make spending match income and assets. That’s a key part of retirement planning.

Don’t forget to include inflation in your spending estimates. Most of what you’ll spend money on in retirement will increase in price over time.

Imagining your retirement lifestyle also increases your retirement readiness, preparing you psychologically for the changes retirement will bring.

Exclusive  Fed Maintains Easy Money

#4 How will you pay for medical expenses and any long-term care costs?

The wildcards in most retirement plans are medical expenses and long-term care. Their timing and amounts are unpredictable.

Many new retirees underestimate these costs and overestimate what Medicare and other government programs will pay for.

The best way to control retirement medical expense spending is to maximize insurance coverage.

Sign up for a Medicare Advantage plan, or join traditional Medicare and add a Medicare supplement (Medigap) plan and Part D prescription coverage. Your fixed monthly expenses will be higher because of the insurance premiums, but your potential maximum out-of-pocket expenses will be lower.

If you don’t buy the insurance, you should save more and spend less on other things. You’ll need a cushion in your nest egg for large medical expenses.

For long-term care, most people should use a combination of personal income, assets and insurance. You can choose traditional long-term care insurance, an annuity with a long-term care rider, or permanent life insurance with a long-term care rider. We show how to make this choice in this month’s Insurance Watch. (Click here for immediate access as a full Retirement Watch subscriber.)

#5 How much guaranteed lifetime income will you have?

Financial security is increased when you have income that is guaranteed to continue no matter how long you live. I recommend that most people have enough guaranteed lifetime income to pay their fixed, basic expenses. That reduces much of the stress and uncertainty of retirement, and it also makes some people more comfortable investing for higher returns with the rest of their nest eggs.

Social Security is the only inflation-indexed guaranteed lifetime income for most people. Don’t make a fast decision on when to receive Social Security benefits. You have choices, and it’s important to optimize the Social Security decision, especially for married couples. The right choice can add tens of thousands of dollars of lifetime income.

Exclusive  Invest in Gold to Profit amidst Bear Market

You should also consider buying additional guaranteed lifetime income through an immediate annuity or longevity annuity (also called a deferred income annuity).

#6 How will you manage and spend the nest egg?

Of course, you need an investment strategy, and it will have to be adjusted as circumstances change.

The great gap in many retirement plans, though, is the spending strategy. Surveys indicate most people believe they can spend 7% or more of their retirement portfolio each year without the risk of running out of money.

But the consensus among financial planners and economists is that the maximum safe spending rate is about 4%. Some say the safe spending rate is even lower.

You need to establish a spending policy. Most people don’t. They “wing it.” We discussed how to develop a spending policy in our July 2015 issue.

#7 What is your legacy?

It bears repeating: everyone needs a complete estate plan. A complete plan includes documents such as a will, financial power of attorney, advance medical directive and perhaps more, depending on your situation and goals.

You need to determine how the estate will be divided among the objects of your affection and how to meet any other goals you have.

An estate plan should cover more than what happens to your assets after you pass away. You also need to ask whether it is likely you’ll have to help support either your children, parents or both at some time during retirement.

Of course, you should decide who you want to make decisions when you might need help in the later years.

Like This Article?
Now Get Bob's FREE Special Report:
7 Secrets to a Wealthier Retirement

These [100% legal] strategies could make – and save – you a fortune. Take hold of your retirement nest egg with this brand new research, FREE of charge.

Get Access to the Report, 100% FREE


img
previous article

The first academic study is out on the effect of the sharp increase in the minimum wage in Seattle, and the results are predictably bad. Economists always talk about trade-offs, and the impact of artificially raising wages is a perfect example. When you raise wages above the market rate, the unintended consequences are profound -- unemployment and a shift toward machines instead of labor. Seattle became one of the first major cities to approve an eventual $15 minimum wage back in 2014, mor

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 5 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details

LEARN MORE HERE

Nicholas Vardy

A Stanford and Harvard Law graduate, Nicholas Vardy scours over 40 different global markets every day to uncover new profit opportunities for subscribers. His 3 advisories and trading services include:

Product Details

LEARN MORE HERE

Jim Woods

A 20-plus-year veteran of the markets, Jim Woods has varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

Product Details

LEARN MORE HERE

Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE

DividendYieldHunter.com

Editor Tim McPartland has published Dividend Yield Hunter since 2006. His web site features three model dividend portfolios along with timely income investing alerts.

Product Details

LEARN MORE HERE