3 Questions To Answer Before You Retire
Are you thinking about retiring soon? Have you saved significant assets in your 401(k) or other retirement plan? Even if you have a large nest egg, some important questions must be answered before you retire. Retirement is a big transition. You won't have a paycheck anymore and won't have important benefits like employer-sponsored healthcare. If you retire too early, you may be unprepared for the change. Below are a few questions to ask yourself to ensure you're ready. A financial planning advisor can help you through these questions and other important considerations.
What's your budget?
Spending is a major challenge for many retirees, especially those newly retired. When you retire, you will have more free time than you have ever had in your life. You may be tempted to fill that free time with costly activities like travel, dining out, etc. However, if you spend too much too early in retirement, you may not have enough money left to make it through retirement. That's why it's helpful to establish a budget. A budget helps you keep your spending under control so you can preserve your retirement assets. You can still enjoy retirement and stay on a budget. A financial planning advisor can help you establish your budget and think of creative ways to enjoy your retirement while saving money.
Where will your income come from?
You may have significant assets in your retirement accounts, but do you know how you will turn those assets into income? If you're like most retirees, you will receive income from Social Security and your retirement assets. You also may receive a pension, business income, rental income, and other types of cash flow. It's wise to plan exactly where your income will come from. Which accounts will you use to distribute income? And how much can you expect from each account? By creating a detailed distribution plan, you can make informed decisions about investments and withdrawals to preserve your assets. You can also minimize your taxes. Some accounts may face different levels of tax exposure than others.
How will you pay for healthcare?
Healthcare is a major concern for many retirees. As you age, you may face more health issues. If you're like most retirees, you will receive coverage from Medicare. However, there are multiple parts of Medicare, each providing different types of coverage at different prices. You can also choose a Medicare Advantage plan, which private insurers offer as alternatives to original Medicare. If you're unfamiliar with Medicare, the options may be overwhelming. There's also long-term care, which often is not covered by Medicare.
A financial planning advisor can help you answer these questions and more. They can help you prepare a budget, project your income, and develop a healthcare plan.
For more info, contact a local company like Centric.
