Retiring can be daunting. As we all grow accustomed to our 9-5 lifestyles, the thought of transforming our daily lives permanently can be anxiety-inducing. Luckily, these tips will make the process smoother…
Evaluate The Decision
Before we get into any of the details, it is essential to first check in with oneself to ensure that this is the correct decision for the present moment. There are numerous things to consider here.
It may be the norm to retire at a specific age, but it's not 'one size fits all.' Even if everyone around is doing it, don't allow outside pressure to influence this personal decision. Make sure it is the best move in terms of finances and emotional preparedness, and envision the next stage ahead.
Get The Finances In Check
Not sure if the finances are in place in order to be to retire? The trick is to keep them very organized. Yes, retiring means ditching the exhausting job, but unfortunately, this also means dropping the salary attached to it. Before leaving, one must ensure they can afford to do so.
Spend time analyzing the finances carefully. With the inputs now looking different, it is important to ensure that the outputs can afford to remain the same. If not, consider how they can be reduced to ensure no debt will be accumulated. Perhaps it might be best to wait a few more years to save up some more.
Stage It Out
If the thought of going from full-time work to complete freedom is too overwhelming, it might be a good idea to take it slow. Rather than go head-first all in, dip a foot in the pool and see how it feels. As the British Heart Foundation calls it, retire "in stages."
A good first step may be cutting down work hours or shifts. This way, one can get a taste of freedom without completely giving up on an income stream. It will provide an opportunity to see if the free time is enjoyable or boring, making the ultimate decision feel less radical.
Consider Retiring Abroad
This one may sound a little 'out-there,' but it's not as crazy as it sounds! A significant amount of research supports the fact that retiring abroad can help save money. According to the NewRetirement website, quitting work and then moving abroad is often cheaper than staying put.
The explanation is that by living in a new place, especially one with a lower cost of living, there is an opportunity to reduce financial outgoings. Even living in a warmer country could help reduce heating bills! This means more money in the bank for the years ahead.
Save, Save, Save
By now, it's abundantly clear that savings are the key to a stress-free and enjoyable retirement. For this reason, saving in the years leading up to the moment of retirement is of paramount importance as these are the years when surplus money may be more readily available.
For example, companies may reward their loyal employees with a salary boost. Rather than spending this extra money on a high-priced item, put it straight into the saving fund and feel the rewards of that decision later on. Alternatively, if a financial outgoing is no longer necessary - keep that newfound cash for later.
Pick Up A New Hobby
Never learned how to swim? Always dreamed of being able to play the piano or learn a second language? Now's the time to make it happen! The BHF states that in order to get the most out of retirement, it is a great idea to use the newly available spare time to learn a new skill.
Learning a new skill is not just a productive way to use the hours - but it is also a way to prevent medal boredom. Within a few weeks of retiring, the abundance of free time may lose its instant excitement, and this is a challenging and fun way to keep the mind active.
Consider Part-Time Roles
It is important to remember that retiring isn't a banishment from the world of work. While for most, it means terminating their full-time employment contracts and living a life of complete unemployed freedom, others may still want to work for a few hours a week.
Whether it's working in something that's long been of interest or just a relaxing low-energy job with an opportunity to interact with the locals, there are plenty of options out there. As a bonus, it will help keep the savings account topped up to be used whenever needed.
Go For a Check Up
As one heads into the world of retired living, it's worthwhile checking that the body is fit and ready to go. Booking a check-up appointment with a doctor can be an excellent way to keep on top of any unknown and underlying health conditions that may cause issues in the years ahead.
In addition to lowering the chances of a medical surprise, if a medical issue is revealed, it can help to gain an idea of the treatment costs that could incur. With this in mind, savings can be assessed accordingly and can be another factor in play when deciding the perfect time to retire.
Look Into Automated Savings
Although many understand the importance of saving, many are unaware of how to effectively set up and build a savings fund for retirement. It's a complicated process with many different aspects. This is where automated savings can be a lifesaving tool.
Pension funds are one example of an automated saving service, as employers and employees work together to input money over the years of employment, and investments are made according to the risk desired. But it's not just pensions; various automated services organize savings and reduce stress.
Schedule "Me Time"
One of the biggest perks of retiring is having complete control over one's time. Rather than being a slave to the job's requirements at all hours of the day, now there will be many more opportunities for "me time." These well-deserved moments should be scheduled throughout the week.
Whether it's a manicure, pedicure, massage, or even just a brisk walk in the park, these moments of alone time will do wonders for the mind and soul. It's even a good idea to book these treats prior to retiring, as it will work as a motivational goal to work towards.
Hold Out on Social Security
While it may be ever so tempting to claim social security benefits as soon as the retirement becomes official, it's actually worthwhile holding out as long as possible. Many falsely believe that they can afford to retire earlier than usual by claiming their social security payments before the scheduled time.
But this isn't exactly how it works. NewRetirement explains that, in actual fact, the longer one waits to claim, the larger the fund will be. On that same note, if one collects it earlier than they should, the money may be less than it should be. Patience is key here.
Minimize Household Costs
Household bills can be a significant financial burden, especially when living on a larger property. After retiring, these outgoing finances tend to remain the same, but of course, the incomings are reduced. For this reason, they can cause major issues for retirees.
If possible, trying to reduce household costs can help to ease financial stability after retiring. NewRetirement recommends household bills total between 15 and 20 % of monthly income. This, they say, will help to ensure that the outgoings do not become a financial issue.
Be Mindful of Healthcare Costs
As mentioned previously, medical costs can cause an unexpected demand on the savings fund. In the US, those over 65 will be eligible for Medicare which will help with the costs of medical insurance and healthcare costs in the case of a medical illness.
However, if one is hoping to retire before the age of 65, there are costs to consider as they will not be able to benefit from this service. Healthcare costs and insurance fees will fall on the retiree, and these can add up fast. These unexpected outgoings can be planned for through extra savings or private insurance.
Have a Test Run
The phrase 'try before buying' applies to retiring. For anyone unsure if retiring is the move for them, it may be a good idea to take it for a test run. Instead of committing to the full retirement plan, take a temporary year off work and see if it's a good fit.
Use the time however desired, whether relaxing at home or traveling abroad. If it doesn't feel like a good fit, choke it up to a senior-style 'gap year' and get back to work. For those who can't work out why they didn't do this earlier, make it official and retire permanently.
Shake Things Up
Rocking a new haircut or purchasing a motorbike are exciting decisions that do not need to be limited to just the 'mid-life crisis' stage of life. In fact, there's no better time to shake things up than after retiring, when life can easily slip into a monotonous, fixed schedule.
Big new ideas and bold life decisions can help prevent this confused feeling, but not every decision must be exhilarating and life-changing. Even if it's just adding some new recipes into our dinner cycle or finding a new walking route, these moves can help ensure every day feels a little different.
Make Investments
Savings are important - but investing is even more of a priority if one wants the chance to retire at a young age. If the investments make significant returns, it can help to turn a savings fund into an even bigger pot of money for retiring with. Investment advisors can help with these decisions.
Savings are excellent for ensuring there's money to fall back on in the future, especially after retirement. But investment plans should also be considered from an early point in one's career. Rather than having the money just sitting around waiting, invest it wisely and watch it multiply.
Be Prepared For Taxes
'Tax Day' is often the dreaded red mark in the calendar and a point of looming doom for many. Calculating how to pay them and still have enough money left over for bills and other expenses can cause major stress. This concern can be even greater for those planning on retiring soon.
Preparing oneself and planning ahead for tax payments can help to reduce stress. Calculate the totals in advance and set the money aside. NewRetirement explains that doing this can help people to "feel more secure" and reduce feelings of financial anxiety.
Create a Schedule
When in a full-time job, one's schedule is usually under the employer's control. From meetings to project deadlines, the hours are filled up with the various work demands. We become accustomed to mapping out our days to the minute in order to ensure we can get everything done in time.
When one retires, these strict routines, which we became so used to, quickly become a thing of the past. This can be an unsettling realization when the weekly calendar is full of blank spaces. To avoid this, design a future daily schedule before retiring and brainstorm how the days and weeks will look.
Expect the Unexpected
Like everything else in life, retiring is not one smooth-sailing vacation. There will be ups and downs along the way, and well - it's all part of the retirement journey. Sadly there's no way to prevent the hits, so how can one effectively prepare themselves for these unexpected situations?
As we learn from the fighting champions, it's not about the knocks but rather how well one can get back up after them. As noted by the BHF, thinking optimistically about these future unforeseen challenges will put people in a stable mindset to deal with whatever comes their way.
Divert Concluded Payments To Savings
As one grows older, chances are they may excitedly realize they are no longer required to pay specific outgoing fees. For example, it's likely they will complete the payments on their mortgage and find themselves with a valuable amount of extra cash each month that used to be assigned to this bill.
It is easy to get carried away and use the money for something that would have been considered more of a luxury in the past. However, a good tip is to deposit some or all of this money into the retirement fund. It's not the most fun way of using the money, but it will help retirement to arrive a little sooner.
Dare to Dream
Many of us have seen the 2007 movie The Bucket List, with Jack Nicholson and Morgan Freeman: two terminally-ill men make a bucket list of things they want to experience and set off on an adventure to tick off as many as possible. The film was a box office hit for a reason - bucket lists are a fun way to dream big.
After retiring, the whole world is on offer to explore. With the freedom now available, only the necessary finances stand between a retiree and a completed bucket list. To avoid retiring and feeling instantly overwhelmed by the endless options, get a head start and jot down ideas ahead of time.
Use a Financial Tracker
Being aware of what is going in and out of the bank accounts is an essential baseline for taking control of the finances in the lead-up to retirement. However, these figures can often be incredibly confusing, often reading like a completely foreign language!
Financial tracking systems can be valuable tools for anyone struggling to understand the numbers. These institutions and organizations can take control of the finances and provide, in return, a brief overview explained in laypeople's terms. The best part? These services are mostly free of charge. Win, win!
Give Back
We've advocated for traveling, "me time," and plenty of relaxing treats - but even with all that, there may still be a few hours in a retiree's day that are unaccounted for. Volunteering can be a generous, helpful, life-changing way to use this spare time.
Not only is it a way to give back to the community, but it also often ends up being a rewarding experience for the volunteers themselves. The act of giving can be humbling and enlightening and brings out the best in people. As a bonus, it can be a chance to meet new people and have fun while doing so!
Ditch the Extras
If one is extra concerned about how they will be able to realistically afford to retire, we recommend starting to cut back on the added extras in the years leading up to the retirement. It won't be easy to part with these small luxuries, but it will pay off in the long run when there's a little more breathing room to spend.
Look at each payment and question how much of a necessity it is. There may be a magazine subscription that no one even reads or a television subscription that the family forgot they have. This also applies to household bills. Is the heating really necessary when there's an endless amount of sweaters in the closet?
Visualize the Cash
Ever feel like money is draining from the accounts, and it is unclear where it is really going? Well, a clever hack for this is to group and visualize spending. Track daily spending and analyze its themes. The totals may be shocking and be the trigger needed to make the necessary changes.
For example, calculate how much is spent each month on hot drinks while out of the house or how much goes towards snacks in a year. These figures will make it all seem more real, encouraging reduced spending. Visualize these savings as activities post-retirement, and cutting down will seem all the more exciting.
Change Banks
There are so many different ways to add to the savings pile. However, some are easier to do than others. One of the more simple ways of receiving what is basically 'free money' is to switch banks. While it may sound like a complicated and costly procedure, it is actually a simple way to make money!
By switching banks, one is eligible for a 'switching bonus.' Many of the big banks offer this monetary reward in exchange for transferring money into their establishment. According to MarketWatch, people can earn hundreds of dollars through these bonuses. It really is that easy!
Attempt a 'Money Fast'
We're sorry, but a 'money fast' is pretty much as intimidating as it sounds. A person challenges themselves to avoid spending money on nonessential items for a certain period of time - whether it be days or weeks. It's hard and pretty dull, but it is an effective way to save!
This approach could be the answer for anyone looking to expand their retirement fund for the future. Of course, this should be done prior to retiring when the income is still coming in. Through a 'money fast,' a greater percentage of the salary will go into the savings account, ready to be used after retirement.
Cut Out Meat
We are not recommending cutting out meat to align with a new dietary fad. We're simply suggesting it's a more cost-effective way of living. For the meat lovers out there, this may sound like an impossible challenge. But if one is thinking of retiring, it may be the best way to save up the funds to do so.
MarketWatch explains that by cutting out meat from one's diet and limiting themselves to vegetarian food, one will be able to save hundreds of dollars in the process. Food expenses can consume a considerable portion of one's income, and expensive meat products are often the biggest culprit.
Switch Phone Providers
Another expense that may be seriously cutting into the income is phone bills. Choosing the right phone plan from the right provider can be a real challenge, and people often end up subscribing to a bunch of services they don't use or need. Hundreds of dollars can go towards unused data and phone call minutes.
The industry's best-kept secret is that there are some truly affordable phone packages out there. As one approaches retirement, an efficient way to save money is to consider changing providers or schemes. Cheaper plans often still include plenty of call minutes and data. Spend the time shopping around.
Look Ahead
Last but certainly not least, we branch away from financial advice toward the philosophical. Once a person retires, they can often feel a heavy sense of loss. They've left behind the life they know and the lifestyle they grew to love. How can one avoid this pain?
While it may be easier said than done, it is best not to dwell on the past. Rather than sitting at home and reminiscing on the good old days in the office or with co-workers, focus on moving on and looking ahead. Retirement has so much to offer, and a whole new adventure is about to begin...