How to Smooth the Transition Into Retirement
For decades, your ultimate goal was to save enough for a comfortable retirement, working under the assumption that you'd be able to leave the workforce, and enjoy your golden years among family and friends. But the day to begin preparing for it is now, and that's true whether you're years away from retirement or if it's coming up soon. Of recently surveyed retirees, only 72 percent said life in retirement was better than or the same as it was before it, according to the Nationwide Retirement Institute (NRI). So, what can you do to better prepare yourself for this next chapter of your life? Here's what to consider, in two phases.
Before You Retire
You will first want to decide on when you want to retire, then plan your financial goals around that estimated age. Kelli Keough, head of digital and client solutions for U.S. wealth management at JPMorgan Chase, says that there is no one-size-fits-all for the timing of retirement, which is why it's important to discuss your goals with a financial advisor and to make sure that you have your finances prepared to no longer be in the workforce. An advisor can help you to figure out how much you will need to have saved for living on and how to allocate your assets to reach your goals.
In your planning, estimate your monthly and annual income needs. Keough also recommends determining your expenses and preparing a budget ahead of time, regardless of when you retire. Will you freelance or work a part time job to make up any difference, or will that just be extra money for vacations and other fun expenses? Additionally, you also want to plan for your healthcare needs. If you wait to retire until you qualify for Medicare, then the majority of your needs should be met. But if you retire early, you will need to factor that into your plans before leaving the workforce.
Once you have your income, finances, and healthcare plans settled, then you can start the retirement process. You will need to inform your employer, apply for Social Security benefits if you are 66 or 67, and apply for withdrawals from your retirement accounts. If you are 65 or older, you also need to apply for Medicare so that it is active whenever you leave your job. You will likely train the next person who takes over your role as you leave the company. This is an opportunity to provide mentorship. In fact, you can always decide to offer consulting services or mentorship even after your retire.
Beyond finances, you will have the time to pursue opportunities for personal growth. Retirement is a great time to begin new hobbies, pick up old ones you had from before life got busy, visit your friends and foster new relationships, and take those vacations that you may have put off because of work or other responsibilities. Surround yourself with family and friends. Connect with a retiree group if you want to make more friends in the same area as you. Retirement is an exciting time in your life, and you can smooth the transition into it by planning for it ahead of time then enjoying it in the moment.