Four Questions to Guide You
From 360 Degrees of Financial Literacy, American Institute of CPAs & Florida Institute of CPAs
1. What do you want to do?
Downsize and travel in retirement? Start a small business or consulting practice? Stay in the family home and pursue new hobbies? Determining what “retirement” means to you is key to figuring out what your financial needs will be.
2. When do you want to do it?
Are you planning to quit as soon as you hit retirement age or keep going to 70 or beyond? Does part-time work sound like a good transition? Once again, knowing when and how your financial situation will change is important in your planning.
3. How is your health?
Considering current ailments or conditions can help you determine potential medical costs in retirement. If you’re not able to be as active as you once were, for example, you may find it satisfying to get involved in community or volunteer work rather than make plans for world travel. Focusing on preventive care now also has the potential to minimize health care costs later and allow you to better enjoy retirement.
4. How much money will you have?
Use online retirement calculators to see how much income you can depend on in retirement and what your needs may be. To get a realistic idea of how much you’ll require, factor in the goals you’ve come up with relating to what you want to do and when, along with possible health care issues and other considerations.