One of the biggest roadblocks to retirement is determining a budget ahead of time. It is important to plan early and project how much money you will need to be able to maintain your lifestyle. This includes basic expenses for food, transportation, housing and health care, as well as other luxuries you might want.
Knowing how much you will spend annually and how many years you will live in retirement can help you assess your retirement needs clearly. Here are a few indicators that you are good and ready.
You do not have debts.
You are officially debt free. You no longer have car loans, credit cards and mortgages to pay off. These can have a huge impact on your ability to save up and set aside for your retirement. Debts can affect how you spend and what kind of lifestyle you will be able to enjoy later on in life.
You can live anywhere in the world.
The kids are all grown up, and they do not depend on you for financial help anymore. So, it is now easier for you to set up and save more for your retirement fund. Some retirees choose to retire in other parts of the world where the cost of living is lower, and there is plenty of sunshine and warm weather.
Other retirees choose to move into a nursing home in Davis County or a retirement facility elsewhere to be with people their age. This is ideal for retirees who have health conditions that need close monitoring. Instead of living at home all by themselves, they will get the best care and be surrounded by their peers inside these facilities.
You have quite the investment portfolio.
Make sure you place your retirement fund in various pots. You can use the 401(k) or IRA to save up for your retirement. They are subject to ordinary income tax, but the good thing about them is when you retire, you will only pay 10% for the penalty (early withdrawal). When you diversify your savings for retirement and make some investments, you make early retirement easy for you.
You have taken care of your insurances.
One of your biggest expenses when you retire, no doubt, is health care. While health insurance can help with some costs, it will not cover everything, and that includes the cost of long-term care. Plus, you will no longer be eligible for them (like Medicare) when you turn 65.
You should ask yourself if you would be able to keep your health insurance until you become eligible for Medicare and other similar health care. Remember, you will be paying for the coverage straight out of your purse. Without the right health insurance, it is hard for you when you eventually are injured or have a serious health condition when you retire. Make sure you have enough money to cover unexpected medical expenses as well.
Retirement is something you should not be scared of. It is a big change, yes, but you can prepare for it mentally, emotionally and physically. Think about your specific plans for retirement. What are your goals when you retire? What will you do? Do you have something worthwhile to devote your time and energy? The clearer you are on your retirement mindset, the easier it is for you to finally rest and retire.