As retirement approaches, one question tends to dominate the conversation:
Have I saved enough?
It is an important question, but retirement readiness involves much more than reaching a certain account balance. A strong retirement plan should connect your money to your life:
What do you want your days to look like?
What experiences matter to you?
How much income will that lifestyle require?
How will healthcare fit into the picture?
And when should Social Security begin?
Here are five areas to consider as you prepare for retirement.
1 – Define What Retirement Looks Like for You
Before building a retirement budget, build a retirement vision. Think less about spreadsheets for a moment and more about your bucket list:
Do you want to travel internationally?
Spend more time with grandchildren?
Golf several days per week?
Volunteer?
Buy a second home?
Start a small business?
Consult part-time?
The clearer your goals become, the easier it is to determine what financial resources will be needed to support them.
Retirement planning should not begin with, “Here is how much money I have.”
It can begin with, “Here is what I want my life to look like.”
2 – Take Stock of More Than Your Financial Assets
Your investment accounts matter, but they are not the only assets you bring into retirement.
Consider your experience, skills, professional network, hobbies, passions, and interests. Some retirees discover that they enjoy consulting, teaching, mentoring, working seasonally, or turning a hobby into modest income. The goal does not have to be maximizing earnings. Part-time work can also provide purpose, structure, social interaction, and a smoother transition from decades of full-time employment.
For some people, retirement means never working again. For others, it means finally having the freedom to work on their own terms.
3 – Evaluate Your Health
Financial health and physical health are closely connected in retirement.
Healthcare can become a significant expense, but the larger issue is that your health may determine how you are able to enjoy the retirement you planned. This is one of the reasons it is important to think about retirement in phases. Your early retirement years may offer more freedom for travel, activities, and experiences than later years.
The goal is not to predict exactly what your health will look like decades from now. It is to make health and healthcare part of the plan instead of treating them as an afterthought.
4 – Build a Realistic Retirement Budget
Once you know the lifestyle you want, the numbers become much more meaningful.
Start by estimating what it will cost to maintain your normal lifestyle and fund the things you want to do. Then, compare those expenses with expected sources of income, which might include:
- Social Security
- Pensions
- Investment withdrawals
- Retirement accounts
- Annuity income
- Rental or business income
- Part-time work
If there is a gap between dependable income and expected spending, that does not automatically mean retirement is out of reach, it means your retirement income plan needs to address that gap.
The goal is to create an income strategy that allows your lifestyle to continue even when markets inevitably experience periods of volatility.
5 – Decide When to Claim Social Security
There is no universal “best age” to claim Social Security. Retirement benefits can generally begin at age 62, although starting before full retirement age results in a lower monthly benefit. Delaying beyond full retirement age can increase the monthly benefit until age 70 (Social Security Administration).
But maximizing your monthly check is not necessarily the same as choosing the strategy that best fits your financial plan. The decision may involve your:
- Current income needs
- Health and longevity expectations
- Spouse’s benefits
- Survivor planning
- Tax strategy
- Investment withdrawals
- Overall retirement assets
The right answer is highly individual.
Retirement Is More Than a Number
It is easy to compare your retirement balance with someone else’s and wonder whether you are ahead or behind. But two households with the same amount saved can have completely different retirement outcomes because their spending needs, income sources, goals, taxes, health, and lifestyles are different. That is why retirement readiness should not be measured by one account balance.
The goal is to know what you want your retirement to look like and whether your resources can support it. That can provide something more valuable than simply reaching an arbitrary savings target: clarity and confidence about the next chapter.
▶️ To hear more on this topic, watch the full video here.
