Sunday, October 7, 2012

Is it Time to Retire?

One of the reasons that the unemployment rate has fallen over the past few years, after hovering over 8% between 2007 and 20011, is because thousands of Baby Boomers are beginning to retire.  Over the past few years, Baby Boomers have been turning 65 at the rate of 10,000 per day, but many of them were reluctant to let go of their jobs in the middle of the 2007 recession. 

In many cases, Boomers needed to recoup what they had lost in the real estate and stock market crashes of a few years ago before they could retire.  In other instances, they were afraid to let go of their jobs too soon for fear of another financial set-back.  Over the past few years, however, Baby Boomers began to believe that it was possible for them to retire. 

If you are uncertain whether you are prepared to give up your job in the next few years, listed below are some things to consider.

How to Decide if You are Ready to Retire

Make a Realistic Post-Retirement Budget

The first thing you need to do is make a list of the expenses you have now.  Remove the items that you do not expect to have after you retire, such as commuting costs.  Add in money for the extra expenses you expect after retirement including travel, replacing your car, Medicare insurance premiums, prescription drugs and medical co-payments.  Next, add up the retirement income that you expect to receive from your Social Security, your spouses's Social Security, pensions, annuities and any other sources.  Will you have enough income to cover your expenses, or do you need to make some adjustments?

Consider Ways to Supplement Your Retirement Income

In the retirement community where my husband and I live, hundreds of retirees work part-time for the homeowner's association.  They serve as Gate Ambassadors, bus drivers, receptionists, and office workers.  They are paid several dollars an hour above the minimum wage and are also allowed the free use of some of the pay-for-use facilities in our community. 

Other people in our neighborhood earn extra money selling real estate in the community, working in antique stores and gift shops in the area, and in similar part-time occupations.  A few of our friends have remained in their former occupations, but now only work part-time.  These jobs help retirees stretch their retirement income without the necessity of continuing to work full-time in a demanding career.

Pay Off Debts

If your income will not be enough to cover your post-retirement living expenses, one step you should take is to make a plan to pay off your debts.  If you have credit card payments, car payments, and college loan payments for your children, you may need to pay off these bills before you can realistically retire.  If you have a small mortgage with a low payment, this is one debt you may be able to continue to carry, if you are free of other large expenses.  However, if you are overwhelmed by debt and feel as if you can never retire, you may consider selling assets to free up enough money to clear out your obligations.  If your debts are excessively large, you may even consider selling your current home and buying a smaller, less expensive one.  Your goal is to rearrange your expenses so that it is possible to have a planned, manageable  retirement, before a healthcare crisis or job loss forces you to retire unexpectedly.

Have a Plan for Long Term Care

Many of us will need to spend some time during our lives receiving long term care, either at home or in a nursing facility.  In fact, experts estimate that two out of three senior citizens will spend some time in a long-term care facility.  Approximately one out of five people over the age of 65 will need to stay in long-term care for more than five years.  Everyone needs to make a plan for handling this future expense. 

You may want to purchase Long Term Care Insurance or make sure you have set aside enough assets to cover several years of care.  As part of your long-term care planning, you may also want to write a living will that explains the healthcare decisions you want made if you are too ill to speak to the doctors on your own behalf. 

Plan for How You Want to Spend Leisure Time

What do you want to do with the free time you will have when you retire?  Do you want to travel in an RV, take an annual cruise, spend time on the golf course, or take art classes?  Before you stop working, you need to make a plan that will allow for you to enjoy your retirement.  Perhaps you may want to move to another part of the world, sell your home and buy an RV, or move to a retirement community that has free or low cost amenities such as golf courses and art classes.  Whatever type of retirement appeals to you, you need to include the cost in your retirement planning.  In some cases, the cost of living in a retirement community, another country, or in an RV may be less than you are currently spending on living expenses.  However, it would be wise to discuss the change with others who have tried it and get their advice.  You want to be realistic about what your new lifestyle will cost.

Your Personal Retirement Plan

If you are a Baby Boomer who hopes to retire in the next few years, it is not too early to begin making plans and changes to your lifestyle so that you can make it happen.  There is no reason why anyone should assume that they will have to work until they drop dead at their desk, as I have sometimes heard some people say.  With a little planning, nearly anyone who has spent years working hard on a job will be able to make a plan and find a cozy, comfortable way to have the retirement they always wanted.

If you are interested in more retirement planning tips, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles on where to retire in the United States or abroad, financial planning, common medical issues, changing family relationships, travel and more.

For more help in making your retirement plans, you may also want to read:

Do You Need a Million Dollars to Retire?
Cheap Places to Retire
Finding Niche Retirement Communities
The Villages Active Adult Community in Florida
Popular Retirement Communities in the United States
Laguna Woods Village Active Adult Community
Garden Spot Village Community for Seniors in PA
Best Places to Retire Outside the US

You are reading from the blog:  http://www.baby-boomer-retirement.com

Photo of couple courtesy of www.morguefile.com

4 comments:

  1. Nice article. You present lots of ideas Boomers should consider before planning to retire.

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  2. It is true that, nowadays, boomers are starting to retire, and some of them are finding it hard to enjoy their retirement years. I think making a realistic post-retirement budget is a great idea. Financial management is one of the hardest parts of retirement planning. Make sure you allot enough money for all the things you want to spend on when you retire. Allow for a buffer in your finances so you don’t fall short due to drastic negative changes in the economy. Lastly, use your retirement plan as motivation to do better, earn more, climb higher in your professional career.



    @Cara Larose

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  3. Thanks for your comments. I think that Baby Boomers who are giving serious consideration to retiring soon cannot start their planning too soon!

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  4. Planning planning planning. That's what we all need to do. It's not easy but the effort will be worth it in the end. For a few ideas on how to get going or grow what you have already done, you can check http://www.mutualfundstore.com/planning-and-retirement. Even if you are getting a late start, you have to start somewhere.

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