A new year has rolled in, and it's time to take stock and set goals for 2013. Whether the desired improvement is a waistline reduction or spending more quality time with family, the new year is a fresh opportunity for better things. For those approaching retirement, the new year presents a new chance to engage in preparations for your retired life. Here are some retirement planning resolutions for 2013:
Pick your target retirement age. Once you select when you plan to retire, you can do the math to compare where you want to be versus where you are today. But this isn't strictly a financial calculation. You also need to develop a timeline for the non-financial aspects of retirement. Figure out how you will keep busy, what you need to do to support your good health, where you will live, and what passions you will pursue in retirement. Having a date on the horizon may encourage you to make plans. If that date should change, you will just need to accelerate or decelerate your timeline accordingly.
Forecast your financial situation. Before you retire you need to understand where your money will be coming from and where it will be going. Take a look at all of your sources of income and be conservative about projected rates of return. Track your current expenses to determine a baseline number, and then make adjustments for expected changes in retirement. Be sure to account for travel and entertainment, both of which you may end up doing more of in retirement. By thoroughly understanding what your financial situation will be as a retiree, you are giving yourself time to make adjustments and corrections to help insure you can live the life you desire on the amount of income you will have in retirement.
Try before you buy. Once you retire, you personally will be responsible for how you spend each day. If you want to pursue meaningful activities, it can be helpful to identify them ahead of time. Rather than wait until after you are retired, test drive your interests now. See if they really have the potential to keep you inspired and engaged for an extended period of time. Remember that if you retire at 65 your retirement could extend 20 or 30 years. You don't want to risk running out of stimulating activities that give meaning to your day. The more goals and activities you have in your arsenal, the better prepared you will be.
Hope for the best, but prepare for the worst. Many of us are optimistic about our planning for retirement, but we also need to be realistic. As we age we will face new challenges that we should prepare for as best we can ahead of time. Figure out answers to these common retirement complications: Where will I go if I am no longer capable of living on my own? How will I cope with an extended illness? What are my options if the value of my investments drops 20 or 30 percent? What is my support network if I need help? What will I do if I am forced to look for work to subsidize living expenses?
Do something meaningful each day. After we retire we will try to fill our days with activities that keep us busy and engaged. At the end of the day it's ideal to be able to look back and discover that we have done something meaningful. But you don't need to wait until retirement to start doing what you have always wanted to do. Say something encouraging, give someone a pat on the back, make someone smile, or do something that matters. If we start this practice today, we should be very adept at sustaining this behavior as retirees.
Dave Bernard is the author of Are You Just Existing and Calling it a Life?, which offers guidelines to discover your personal passion and live a life of purpose. Not yet retired, Dave has begun his due diligence to plan for a fulfilling retirement. With a focus on the non-financial aspects of retiring, he shares his discoveries and insights on his blog Retirement-Only the Beginning.
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