Retirement means something different to everyone – no two retirement dreams are the same. Rather than trying to picture your retirement, why not give it a dry run? Ask yourself the following questions. This should help you create a clearer picture of how you might like to spend your retirement years.
Will you stay in your current home?
You might prefer to move to a warm climate or be near your children and grandchildren if you are no longer tied to a geographic location because of your job. You may prefer to sell your current home and buy a smaller one that is easier to maintain and with less property. You may also want to move to a less expensive area to supplement your retirement income. Or, you may be thinking of purchasing a vacation property.
What hobbies do you like to pursue or would you like to pursue?
If you feel you do not have time to do the things that you love to do, use your vacation to take the opportunity. Maybe you love to golf, sail, or hang out on the beach. Maybe you would love to learn how to paint or travel. Some hobbies and interests cost more than others. You will want to ensure the money to pursue your interests is available in your retirement budget when you need it.
Do you view retirement as a career change?
For some people, retirement can be stressful. Work plays an important role in defining who we are. You may view retirement as the beginning of a new career or a chance to change gears, not the end of your working life. Your favorite hobby can turn into a new career. You could use your vacation time to research the possibility of creating a new career or business opportunity.
When do you want to retire?
Can you support your decision financially? After assessing your retirement dreams and your needs and costs, you will need to determine if your retirement savings and any pension you may have will be sufficient to support your ideas. There are only two ways to make up a gap in retirement funds; save more or work longer.
How will inflation affect your lifestyle?
Inflation is a significant factor for anyone relying on a fixed income because purchasing power diminishes as prices rise. It is important to ensure the earnings or returns on your investments will be greater than inflation.
While equities by nature are riskier than fixed income securities in the short term, avoiding them also carries risk. Equities have proven to be more effective in protecting savings from inflation. That’s why investing in equities for the long term is so important.
Tax effective way of supplementing retirement income
Life insurance coverage can be used as a strategy for tax-advantaged accumulation to complement your current retirement income program and increase your estate values. At the same time, it can help you transfer your estate to children and grandchildren.
A permanent cash value life insurance plan allows you to accumulate cash value growth inside the life insurance policy without paying income tax on the growth. During retirement, the cash values can be accessed to provide additional income through a policy loan or partial surrender, or you may be able to use the policy as collateral for a consumer loan.
Securing your partner’s retirement
You and your partner have established a retirement savings plan to help support your retirement lifestyle. But what happens if your unexpected death prevents contributions to the savings plan, or worse, forces your partner to dip into the savings? Years of savings could be wiped out in a short time. Insurance is a great way to protect your partner’s lifestyle now and when they retire.
Secure your retirement dreams
You have established a retirement savings plan to help support your retirement lifestyle. But what happens if a disability or critical illness prevents you from contributing to your savings plan or dip into your savings? Disability insurance provides a monthly, tax-free benefit to help pay for daily living expenses. Optional benefits can be added to ensure funds are still put aside in your retirement. If part of your retirement dream is to continue to work or change careers, your disability insurance can be renewed each year after age 65 as long as you continue to work full-time. Critical illness insurance pays out a lump sum amount to help cover the additional costs associated with a critical illness or condition, and can be purchased with a coverage period up to age 100.