When you first start in the world of work, the thought of retirement doesn’t really enter the picture. In fact, most of us think it just won’t happen.
Some of us will even go to the extent of not contributing to a pension pot – just because the retirement period is such a distance away.
Of course, such an approach is asking for trouble, but this isn’t the reason behind today’s post. Instead, it’s all focused on those of you who are nearing the elusive R-age, and finding out whether or not you have covered all bases ahead of it.
We will now take a look at four crucial questions to ask yourself before taking the plunge.
Is your pension pot in order?
We have just spoken about pensions, but in truth it is completely worthy of its own section.
Hopefully, you have already got your house in order in this regard, and have been contributing to it through your working life. Depending on where in the world you are based, you may also receive a state pension which can also help your plight.
Regardless, you need to make sure you are eligible for all of the above, which might mean asking yourself if you are retiring at the correct legal age.
What about your major expenses?
While most mortgages tend to be paid off as you approach retirement, it is of course not a foregone conclusion. As such, the first question is to ask if your new income is going to be able to cover this payment (which is typically a person’s highest expense). Download a free budget template and plug in the numbers to see if you can pay off some debts faster than you’d originally planned.
This can apply to all sorts of other borrowing. It might be a credit card, or for your car, but ensure all of these expenses are going to be covered.
Don’t be afraid to think outside the box, either. For example, as morbid as it might sound, having enough left in the pot to cover funeral expenses and even care for your advancing years is something that is often forgotten about, but is really important.
Are the kids catered for?
On the most part, the children have probably fled the nest at this point. This doesn’t necessarily mean that the costs have disappeared though. On the contrary, the modern-day way to look at this is to think about assisting them with the purchase of a house, and of course college fees. Make sure all of this is budgeted for.
What will you do with your free time?
On the face of it, this final question might not seem related to finances in the slightest. When you delve into it, all becomes clear though.
Suddenly, you are going to have a lot more disposable time. It means that you will probably need some income to cover this – and this is where the financial consideration comes into play. Work out what you are going to do with your free time, and just how much more this is going to add to your regular outgoings.