Everyone works towards the day they can retire from work. This can be a challenging time, a time where your life gets turned upside down. The following is probably the top five questions you should ask yourself before retiring, but this is not just for people close to that point; everyone should be asking these early on so they have more time to plan.
What kind of lifestyle do I want?
This is probably the biggest factor as it will dictate everything else. Your ideal retirement might be as simple as being able to spend your mornings drinking coffee and reading the newspaper or it might be more extravagant like spending your time travelling.
If you are used to a more extravagant lifestyle you may need to look at whether this can be maintained. If you have a partner you need to set your goals together and make sure you have similar ideals about your retirement.
How much cash flow do I need for my lifestyle?
The type of lifestyle you want will dictate the amount of cash you will need. There are many online calculators that can help you understand how much you will have needed to save. Consider what kind of income stream you might continue to have and how much your expenses are above this.
A large factor that needs to be taken into account is also the rise of your medical costs as you get older.
What about paying off my debts?
Everyone dreams about being debt free. This is especially important in retirement when you no longer have an active income. The amount of debt you have remaining will affect the amount of cash flow you have and therefore the type of lifestyle you can maintain.
If your aim is to leave money or property to your family this may also play a significant impact. You do not need to be totally debt free before you retire but you do need to plan. Try and pay as much off as possible beforehand, which will significantly reduce the burden of your cash flow.
What can I do once I retire?
Most people have spent 40+ years working and often have a little trouble adjusting to retirement. For some their whole identity has been built around their working life whether this is via their social connections, feelings of self-worth or mental stimulation.
You need to think about how you can accommodate such needs in retirement. For some it may include doing casual work or volunteering and for others it may be important to take up hobbies where they can build relationships with people in a similar life stage.
Where will I live?
Many of the parents of my friends have moved since their children left home. Commonly they have moved to apartment living with water views. This question comes into play when thinking about your debts and lifestyle needs.
Some may decide to stay put, but often in retirement many people decide to downsize to a place which suits them better. Some things to consider here is location, affordability, whether you are near your activities and proximity to children and grandchildren. Deciding to move may contribute to surplus cash flow for you to enjoy.