If you are one of the many Americans nearing retirement during the coronavirus pandemic, you’re probably wondering if you should follow through with your plans. According to Robert Powell, a certified financial planner and USA TODAY contributor, these three questions can help you determine if you — and your savings — are ready for retirement.
Do You Have Enough To Live On In Retirement?
If you’re unsure if your retirement fund will sustain you and your spouse’s post-retirement lifestyle, you should re-examine your funds first.
How do you do that? Powell suggests evaluating your savings as a multiple of your annual income since it’s the fastest and easiest way to answer this question.
Conventional wisdom advises that 60-year-olds should have between six and 11 times their salary, and 65-year-olds should have 7.5 to 14 times your income, according to experts at T. Rowe Price. Fidelity Investments recommends similar guidance, suggesting that 67-year-olds save ten times their income.
Suppose you’re approaching 65 and don’t haven’t met those benchmarks yet. In that case, Powell advises that you think about postponing retirement, cutting expenses where possible to increase your savings rate, and curbing your standard of living expectations.
Do You Have A Risk-Management Strategy In Place?
Unfortunately, retirement comes with many risks, and any one could derail the most well thought out plan. But if you have a strategy to deflect those risks before they happen, you will have a much better time overcoming them.
So how do you create a risk-management plan? Powell recommends reading the 2020 Society of Actuaries report, which outlines 13 risks retirees face, their likelihood, and management strategies for each one.
Edgcomb Financial Advisor’s retirement management advisor Lee Edgcomb notes that developing your own “paycheck” during retirement is particularly tricky since the future is uncertain. Edgcomb says that rather than “winging it,” which only raises the possibility of risk, retirees should become informed of the risks to improve their self-reliance.
Edgecomb ads that the most significant risk to your retirement strategy is external expenses stemming from your children and grandkids, as “They are usually big tickets and non-negotiable.”
What Are Your Retirement Plans?
Powell observed that most Americans retire “from” work but not “to” something. Consequently, many retirees return to the workforce or become depressed since they no longer feel a sense of purpose.
So what should you do? According to Powell, you should take the time — several years before retirement — to determine your plans and find something to maintain your sense of purpose. Whether it’s pursuing a new hobby, trying new activities, volunteering, or traveling, you must do something to keep your mind and body busy.
But what’s the hurry? Larry Jacobson, Buoy Coaching founder, said, “The main answer is that it wouldn’t matter except for time. If one has all the time in the world, then they can use the beginning of retirement to figure out the rest of their life. But as time presses on, without a plan, one will start their retirement with the search mode of their transition, rather than jumping right into what they think they want to do.”
Jacobson added that “Having a plan is the remedy,” to prevent retirees from slipping into a clinically depressed state.
And it’s okay if your retirement plans change, because “with a plan, at least there’s something to change,” he noted.
- Powell, Robert. “If You’re Close to Retirement, Here Are 3 Ways to Know You’re Prepared.” USA Today, Gannett Satellite Information Network, 12 Oct. 2020, eu.usatoday.com/story/money/columnist/2020/10/11/retirement-3-ways-know-youre-ready-retire/5944318002/.