For most people, once you start to approach your 60s you begin to seriously think about how your life will change in your retirement. While earlier in your career you were more focused on building your retirement savings, thoughts now turn in earnest to the reality of transitioning to a new lifestyle.
And while it can be very exciting to think about the extra time you’ll have for travel and other hobbies, a wholesale change in lifestyle can be unsettling for some people. To help prepare for this dramatic lifestyle change, here are a few things to keep in mind for when you do finally retire.
Decide on your goals before you retire
When it comes to your retirement, it’s not what you’re retiring from, it’s what you’re retiring to. Sure, your career was an important part of your life, but now you need to decide what you want the rest of your life to look like. Hopefully, you have this figured out early since you don’t want to wonder what you should do on the first day of retirement.
Think about what your new daily routine will look like. It can be something simple such as going for a walk or taking your time with breakfast. You could then work on some of your hobbies before lunch. An afternoon nap probably sounds great and you’d still have plenty of time to do whatever you want before it gets dark. Being flexible is key but having some kind of routine at the start will ensure that you don’t fall into a slump.
One of the best things you can do once you retire is to start working on things you may have been pushing off. That could be planning out your bucket list of travel destinations or spending more time with your grandkids. Figure out what’s important to you and plan around it.
Update your budget
Many people wait until they’ve retired before updating their budget, but that’s a huge mistake. You’ll want to create a new retirement budget now so you can see what your finances will look like once you finally leave the workforce.
Although you may not have income from a full-time job, you will have a combination of your retirement savings, the Canadian Pension Plan, and Old Age Security. Some people will semi-retire and still work part-time, so you could still have money coming in. The idea here is to project what your new monthly income will look like when you’re retired.
With your new budget, you’ll likely spend less on transportation, eating out, and clothes since you won’t be going to work every day. However, some parts of your budget such as hobbies and travel may increase as you’ll have more time to enjoy the things you love.
Figure out your health insurance needs
Some employers will allow you to keep your benefits for a fixed period after you retire, but most people may need to get their own coverage. This is a huge concern for some older people as they may need prescription drugs, vision care, registered specialists, therapists, and even dental care.
Many insurance providers will give you coverage with no medical questions if you apply within 90 days from the time your old benefits end. Plus, a private insurance plan will usually give you access to healthcare practitioners online 24/7. This is vital for any retiree who wants to ensure that they’re paying a fixed price for their benefits or if they plan on working part-time but may not qualify for traditional benefits.
Speak to your financial advisor
Having a ton of goals is great, but can you afford it? You should speak to your financial advisor long before you retire so they can crunch the numbers to see if what you have saved will be sufficient to fund your lifestyle goals.
Talking to your advisor early can also be beneficial since it may reveal things that you weren’t aware of. For example, if you believe you’ll only need $50,000 in yearly income when you retire, your financial advisor should be able to tell you if you’re going to meet that goal. If you’re already well above that pace, you might be able to retire early.
For those who take a more active role in their financial planning, there are a number of online tools available to help with your planning. The Government of Canada website also has great information to help you understand the services available to you when you do retire.
Although 65 is the typical retirement age, there’s nothing stopping you from retiring early. If you can afford to retire now, why wait until you’re 65? You might as well retire early.
If you’re fortunate to have a workplace pension, and you’ve already put in enough years to get it paid out in full, there’s no reason to stay since you wouldn’t be leaving any money on the table by working longer.
You also need to think about the things that you’re personally concerned about. If you have health issues, retiring may not be a bad thing. For those who envision themselves having an active retirement, leaving the workforce a few years early would give them a head start while their bodies are still mobile.
Many people worry about retiring since they won’t know what to do with themselves. Work has been a major part of their identity for decades, but that doesn’t mean it defines you. By preparing in advance, you’ll be ready for retirement, whenever that day comes.