fbpx Skip to main content

Let’s face the facts: retirement preparedness looks much different today than it did five decades ago. With each passing year, the process of entering one’s golden years becomes more and more of a complicated matter. We must save differently and plan differently than we did before. Our goals are different, too. Some have grandiose dreams to travel the world, while others are content to pursue local hobbies and spend time with family.

Whether your retirement dreams are big or small, it’s important to ensure they’re realistic in terms of your finances, as well as your own mental and emotional state as you enter your golden years. Following are some ways to mentally and physically prepare for retirement:

1. Redefine who you want to be in retirement.

In our culture, many people allow their professions to become their identities. That’s why retirement can be difficult for some: they no longer know who they are.

Start thinking about how you’d like to fill your time before you retire. Perhaps you have a desire to travel, volunteer, pursue various hobbies, or even continue working part-time. It’s important to have a plan in place so you don’t feel like you’re simply drifting from one activity to the next in retirement. You can always switch directions down the road, but if you come up with a new schedule sooner rather than later, you’ll feel mentally prepared for what’s in store when you quit working.

2. Make sure your spouse is on the same page

Are you retiring earlier than your spouse? If so, it can be a difficult transition not just for you, but for your partner as well. There are many adjustments that will need to be made to your daily lives.

Perhaps your spouse works from home, and your increased presence around the house during retirement will cause disruptions to his or her work. Things will also change from a financial standpoint. You’ll have to make adjustments to your budget and make sure your money situation is in line with your goals.

Work with your spouse on a suitable plan that works for both of you as you prepare for retirement. The key is to communicate clearly with your spouse about expectations and the changes retirement will inevitably bring.

 3. Analyze your emergency fund and medical coverage

Medical costs are especially challenging during retirement, as finances can be tight, and health issues can arise unexpectedly. It’s important to understand what is covered by Medicare parts A and B, and Medigap policies.

Even with proper medical insurance in place, however, you should still plan for the unexpected. If your mortgage is paid off, some experts suggest getting a home equity line of credit before retiring. This can serve as an emergency account that can be less costly than putting expenses on a regular credit card.

It may seem like a lot, but it’s a good idea to keep 18 to 24 months of your non-discretionary spending in a savings account in case of emergencies. Make sure this account is FDIC insured so you can readily access funds with no penalties at any time.

4. Give your retirement a trial run

It’s a good idea to determine how much income you’ll need to cover your living expenses well before you actually retire (I recommend about a year). The best way to do this is to create a retirement spending plan and test it out for a couple of months.

Figure out how much you’ll receive each month in Social Security benefits, along with funds from pensions and retirement accounts. If you’re cutting it too close by the end of the month, it’s time to reevaluate things. Can you lower your standard of living? If not, you may consider taking on some part-time work during retirement in order to cover your expenses.

The bottom line

It’s important to know what you’re getting into with retirement. By following the above steps, you’ll feel more mentally and financially prepared for the years ahead.

Author Ron L. Brown, CFP®

Ron is a CERTIFIED FINANCIAL PLANNER™ and President of R.L. Brown Wealth Management. He specializes in retirement, estate, and business planning for professionals and entrepreneurs. Ron assists his clients with creating a financial plan to ensure they are able to live their ideal lifestyle during retirement and leave a strong legacy for their family. Ron has been featured in The Wall Street Journal, US News, Yahoo Finance, Investopedia, and numerous other high profile financial publications.

More posts by Ron L. Brown, CFP®
Notify of

Inline Feedbacks
View all comments
Would love your thoughts, please comment.x