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5 Questions You Forget to Ask With DIY Retirement Planning

If you’re taking retirement planning into your own hands, it’s easy to get bogged down by the dollars and cents without thinking about what retirement will actually feel like. In other words, when it comes to retirement, are you thinking about a particular number you want in your bank account, or are you thinking about what type of lifestyle that number will afford?

We’ve worked with many DIY retirement planning families, turned clients, who say that when they began planning for their own retirement, their number one concern was how much money they had in the bank. While it’s a common mindset, it’s a short-sighted way to think about retirement.

Be careful not to adopt that mentality or you will miss a huge part of post-work life: reinventing yourself and having fun. Instead, ask yourself the following.

1. Am I Saving (and Spending) Based on Values and Goals?

Here’s a question many of our clients take pause when considering: What does your relationship with money look like?

Dive deeper by asking:

  • Were you raised in a family that talked about finances?
  • Do you feel engaged with your money?
  • Do you think your spending habits reflect who you are currently?
  • Do your spending habits reflect who you want to be during retirement?

With these answers fresh in mind you might start to realize your perspective on money needs to change as you enter retirement.

Retirement planning isn’t about having a sum of money in your bank account, it's about identifying what’s most important to you during your next chapter in life and assessing if your spending habits and relationship with money are setting you up to match it.

At Wealth Legacy Institute, we take a LIFE Experience™ approach, which helps couples and individuals saving for retirement illustrate different scenarios that can lead them to their final retirement goals. So, if you’ve identified travel as your number one priority during retirement, is it still necessary to own nine jackets in different “shades” of black as if you were walking into an office each day? Or, instead of hitting the latest seasonal releases at Neiman Marcus, should you change your spending habits and look at airfare instead?

The LIFE Experience™ approach may also reveal that you need to pull back on your current lifestyle, adjust your retirement age, or work with a personal financial advisor so you can live by the values you know are the most important to you.

2. Is My Current Home My Forever Home?

Now that you’ve taken into account your desired retirement lifestyle and values, you should consider if your current living arrangement is best suited for your ultimate goals.

Let’s do a quick exercise. Finish the following statement: retirement will allow me to...

  • Move to a new city
  • Move abroad
  • Become a snowbird
  • Sell my home and buy an RV
  • Downsize my home
  • Enjoy my home as it is

Which response made you feel the best?

If your goal is to become a snowbird, do you need to keep your current home, or does downsizing make more sense? Or perhaps your goal is to relocate, will retirement allow you to experience what a new city has to offer?

Freeing yourself from an expensive mortgage by downsizing or relocating can translate into more ‘play money’ during retirement, and might just be the key to enjoy the retirement life you want to live.

3. Will Healthcare Costs Affect Me?

You’re in retirement now, and Medicare will take the place of your previous health insurance, right? Unfortunately, it’s not that simple. Even if you’re eligible for Medicare, you’ll still have at least some medical expenses to take care of.

Just like all insurance plans, you’ll need to consider the copay, deductible and coinsurance costs. Medicare might be more expensive than the employer-sponsored plan you enjoyed in the past.

For Medicare plans with prescription medication, your breakdown of costs might look something like:

  • Annual Drug Deductible: $95
  • Drug Copay: $2 - $95
  • Coinsurance: 31%
  • Estimated Annual Health and Drug Costs: $7,850

You can use the Medicare site to estimate your specific costs. And, if you’re located in Denver, or plan to move to Denver, you can use Connect for Health Colorado’s website for your customized estimate.

Is your partner still working? If so, to ease into health insurance costs, can you keep your health insurance under your employed spouse? Saving just five years of health insurance premiums can save you roughly $40,000 in health care expenses if the example above matches your healthcare coverage.

4. Should I Retire At the Same Time as My Partner?

Healthcare backup isn’t the thing to weigh when considering retirement alongside your partner.

Think about how your day is currently spent as a working person. If you’re like most Americans, you’re probably working eight or more hours a day, and sleeping anywhere from 6-8 additional hours. That leaves roughly a third of your time left to spend with friends and family.

What happens when that time commitment increases to two-thirds of your time, maybe even more?

When you retire at the same time as your spouse, you are suddenly spending your entire day together. And, to be blunt, conflicts can arise.

Entering retirement is already a major transition and many people struggle with their identity when they retire. What you want out of retirement might look different than what your partner wants. And, when you retire together, you may lose valuable "me time."

By staggering your retirement schedules, you can explore the new chapter of life individually, learn new routines, and then determine how your new arrangement works into your previous lifestyle.

2020 Denver Retirement Guide

5. Am I Factoring in the Fun?

Above all, as you’re creating a retirement financial plan, don’t forget to think about fun!

You’ve spent nearly 50% of your life working, so what are you doing with the fruits of your labor and your new wide-open schedule?

Let your imagination run free and create a retirement in technicolor, not the grey and black hues of paperwork. Think about all the new experiences and pleasures in life your post-work you can bring:

There are so many options for your next chapter of life as long as you’ve created a bulletproof retirement plan. For more tips on money management as you plan for retirement, check out my book Money Secrets.

Ready to take the next step?

Let’s talk!

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