Retirement is a life adjustment that everyone must take into consideration. Whether you’re retiring overseas or locally, preparing for it is a vital aspect of your financial journey, what with expat tax, financial freedom, and retirement checklists. Planning ahead of time, being intentional with your spending, and remaining focused on the type of future you desire will help you get through it.
However, most people interpret the term "retirement planning" to mean preparing financially for retirement only. While being able to afford to retire is crucial, it is also imperative to condition yourself entirely to guarantee a seamless progression to this next stage of your life. You can look at it like flipping a switch mentally, emotionally, and financially.
The
Woes and Joys of Retirement
You've probably given some thought to how you'll spend your golden years. However, there's a strong possibility you've never considered the psychological impact of retiring. Retirement is frequently associated with loss of identity. It can force you to doubt who you are, now that you’re no longer working, whether you were an accountant, a teacher, or healthcare professional.
The transition from being a full-time employee to a retiree can be challenging, especially if you have worked your entire adult life.
At first, you’ll go through the "honeymoon stage," where retirement feels like a long vacation, allowing you adequate time to decompress and reexamine your life. However, retirees may experience loneliness, frustration, and even depression once this period is through, seeing the years ahead of them with no purpose or passion.
Everyone's
road to retirement is unique. Whether you intend to retire in five or 30 years,
you must plan for the best chance of a happy and financially secure future.
5
Steps to Take When Planning for Retirement
If
you're already at the starting point of retirement and feeling a little lost,
keep in mind that you're not alone in this. Check out the following steps that
will efficiently help you prepare and adapt for retirement.
1. Prepare
ahead of time
Every life transition, whether favorable or otherwise, can cause an emotional impact you may be unaware of beforehand. Most people can also not prepare for a major turn of events in just a couple of days, weeks, or months.
As
such, it's crucial to begin planning for retirement 1–5 years in advance. This
timescale varies by person and circumstance, but know that adjusting to the
idea of retirement takes longer than you expect. Make a list of what it
involves for you as this will significantly help you enter retirement easier.
2. Assess
your finances
Retiring is costly. As estimated by experts, you’re going to need about 70 to 90% of your pre-retirement income to sustain your quality of living once you retire. A stress-free retirement is one in which finances are under control. Ensure your financial retirement plan is up to date and that you're on the right track.
If
you've decided how to spend your retirement, you should also consider if your
financial strategy supports your leisure plans. You don't want to retire with a
head full of ambitions but be unable to sustain them.
3. Envision
the retirement life you want
Many people are so preoccupied with the financial aspect of their retirement and forget to consider what they’ll do with their time. You have to be emotionally prepared for retirement to avoid succumbing to loneliness, depression, or unfulfillment.
Visualize
yourself doing the things you've always wanted to do. Making a bucket list also
helps you focus on what you want to do with your life as a retiree.
4. Determine
where you will live
Your
retirement location may have a significant impact on your costs. For example,
if you seek to retire overseas, you may have to consider additional
expenses from expat tax preparation and filing. Another situation could be
where if you sell your property in a high-cost area and relocate to a
condominium in a low-tax state, your expenses may drop dramatically,
potentially freeing up revenue for other purposes.
You
could also consider staying in your current location by downsizing to a more
affordable home. Also, you may choose to live in an area with high living costs
to be near your grandchildren or relocate to a cosmopolitan city.
5. Involve
your loved ones or find a support system
You’ll need your loved ones or support group to have your back when things go wrong as you retire. Letting your family know about your decision to retire allows them to offer the assistance they’re willing to give.
There’s
also nothing wrong with reaching out for help, as everyone will need other
people in their life one way or the other. Look for a retirement club if your
loved ones are far away. Keep in mind that it’s best to have a support system
as opposed to retiring in isolation.
The
Bottomline
It is never too late to begin planning. It's easy to forget about your retirement plans when it's a decade away. However, it's critical to prepare ahead of time and set reasonable goals so that time works in your favor and you enjoy the retirement you've always wanted.
Author Bio:
Randall Brody
Assistant Marketing Manager
Randall is the Founder of Tax Samaritan, a boutique firm
specializing in the preparation of taxes and the resolution of tax problems for
Americans living abroad, as well as the other unique tax issues that apply to
taxpayers. Here, they help taxpayers save money on their tax return.