Preparing for retirement is not just about money, it means thinking through what this new phase of life might look like. In the American College of Financial Services curriculum for the Retirement Income Certified Professional® designation for financial advisers, we spend a lot of time on fact-finding. One aspect of this is helping pre-retirees think through life in retirement. One way to do this is to take a journey through the various aspects of retirement life.
Here are eight common retirement themes and some corresponding questions to ask yourself and to discuss with your spouse to help build a better, more well-defined retirement future.
In 2018, a 65-year-old couple entering retirement needed $280,000 to cover health care and medical expenses through the rest of their lives, according to a Fidelity Investments' study. A retiree’s health can affect virtually all aspects of retirement, including what activities they will be able to do, the choice of living arrangements, the timing of retirement, and whether work in retirement is feasible. Not surprisingly, health status is also highly correlated with retirement satisfaction. Good questions to consider include:
- Do you pay attention to maintaining your health and fitness?
- How do you stay active and fit?
- Do you have current health issues or concerns that limit your activities or otherwise affect your retirement planning?
- Do you have concerns about future health issues based on your own or family medical history?
Your family can have a prevalent impact on retirement. They can impact retirement costs, how retirees spend their time, how they obtain meaning from their retirement, and where to live in retirement. Good questions to consider include:
- Do you have living parents? Do you participate in their care?
- Tell me about your children and grandchildren. Do you see them a lot? Do you help them financially?
- Do you help your family financially? Do you struggle with deciding how much you can afford to give them?
- Is living close to your family important to you now or in the future?
The role of work in retirement is an important discussion, whether it is paid or volunteer work. Work can provide financial resources, meaning or purpose, and companionship. Good questions to consider include:
- Are you planning to work (for income) in retirement?
- What type of work are you likely to choose, and what are your reasons for doing it?
- Are you planning to do volunteer work in retirement? If yes, what would you like to do?
Leisure takes on new meaning in retirement as it can mean pursuing current interests, developingnew ones, or finally having the time to pursue dreams you’ve put off. Good questions to consider include:
- What leisure activities do you enjoy? Do you think that they will take on different meaning in retirement? Which activities provide connections with other people?
- What would you really like to try that you haven’t done before?
- What groups are you part of that you will support or spend time with in retirement?
- Is lifelong learning important to you?
5. Life’s purpose
Having a sense of purpose is an important part of retirement satisfaction. This doesn’t have to mean changing the world; it simply means having something that is important to you and gives you a reason to get up in the morning. Oftentimes meaning comes from relationships with family and friends, work or volunteer work, or leisure activities that become serious hobbies in retirement. Good questions to consider include:
- When you think about activities that you will pursue in retirement, which ones do you think give you a sense of purpose?
- Could you list the three things that you want to be sure that you will accomplish during retirement?
A discussion about housing may seem mundane, but it can tell you a lot about a retiree’s goals in retirement. The vast majority stay in their family home, although some choose different housing because they want a new life in a new location, want to downsize, or are looking for a different type of living arrangement. Good questions to consider include:
- Are you planning to stay in the same home that you have been living in throughout retirement?
- If you are planning to move, why? What are you looking for in a new home?
- If you are planning on a big geographic relocation, where are you going and why?
- How will relocating change your lifestyle?
Legacy is more than just about leaving money; it is leaving a mark on the world and having a sayin how you want to be remembered. Figuring out what your life has meant is an important issue for retirees. Good questions to consider include:
- When you think about leaving a legacy, what does that mean to you?
- What would you like to change or preserve in the world?
- If you did not need some of your financial resources today, who would you give them to?
- Are you inclined to support any charities? Where have you given in the past? Where do you volunteer your time? Are you on any boards of charities?
- Besides money, what would you like to leave your family with as far as any special values, traditions or memorabilia?
8. Long-term care
Planning for long-term care really means planning for a stage of life when you are frailer and may not be as independent as you are now. Paying for additional care is an important issue, but there is a lot more to long-term care planning than that. Good questions to consider include:
- If you have some physical limitations and you stayed in your house, who would handle the chores that you currently are doing?
- If you had trouble making decisions on your own due to some cognitive impairment, who would make them for you?
- If you could not care for yourself, who would care for you? How would you pay for your care?
Going through an exercise like this is really important, as each of these subjects can affect both retirement finances and satisfaction. Hopefully, it will also trigger discussions with your spouse, family and friends about what is important for you to accomplish in this exciting new life stage.
Dave Littell is the co-creator of the Retirement Income Certified Professional® (RICP®) program and a Professor of Taxation at The American College of Financial Services. He focuses on retirement income process, strategies and solutions to increase retirement security for consumers, business owners and their advisers through digestible retirement education.
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