4 Key Financial Questions to Ask Before Retirement

If your plan for retirement is a little off-base, it can create a world of challenges down the line. That is why it is so important to ask yourself some questions before retirement. Here are some of the questions you should ask yourself long before you leave the workforce.

Questions to Ask Before Retirement to Financially Prepare

Do You Have Enough Guaranteed Income?

In the United States, many Americans receive guaranteed retirement income in the form of their Social Security benefits. However, these payments may not be sufficient to support a comfortable lifestyle. Other sources of guaranteed income, like pensions, can supplement your finances. 

Not all of your future income needs to be guaranteed, however, it is beneficial to have more than Social Security in your financial roster. 

Can You Handle Your Debts?

If you owe significant amounts of money as you head into retirement, you aren’t alone. Debt appears to be a primary cause of anxiety for many Americans. It is also a key cause of reduced standards of living in retirement. 

Credit card debt is starting to rise again and according to an AARP study, the student debt of those 50 and over is six times higher than it was 15 years prior. This is in part due to older adults co-signing for their younger relatives. It comes as little surprise that those retirees who report financial security are those who are more likely to have paid off their debts by retirement. 

Will You Keep Working Part-Time?

Many people who are planning their retired life intend to keep working. However, that is not always possible. As you age, the likelihood of experiencing a health challenge goes up exponentially. 

Most Americans plan to retire when they turn 65 and gradually transition. However, according to one study, the average age of retirement is actually 62, implying an unexpected change occurs with most individuals. Whether this is a change in health or a change in the size of the companies these individuals work for, working into retirement is not always guaranteed. Additionally, taxes and Social Security may play a role in a person’s desire to keep working. At a certain point, hours worked in retirement become taxable, which can discourage people from even wanting to work part-time.

Is Your Plan For Spending Realistic?

Making an estimate of how much you will spend in retirement is a vital aspect of planning. Some expenses might be lower once you stop working (like gas for your commute) while others may go up. This is especially true in the early years when travel and leisure are at their highest with retirees. Since many American couples will spend about $300,000 in out-of-pocket medical expenses, there may be a disconnect between how people think they might live in retirement and what their needs actually are. 

Though what the future may hold is uncertain, your financial planning doesn’t have to be. Medical expenses can come out of nowhere, and retirement planning can make the difference between outliving your finances and aging well. With this FREE eBook, you can learn the  6 Money Planning Tips for Your Senior Living.