Some people want early retirement, while others are happy to work longer. However, both parties want a happy retirement, and this can only come from planning. Regardless of age or how long you have until you retire, you have to start planning now. The last thing you want is to not be prepared when the day comes. Financial planning for retirement is absolutely essential if you don’t want to worry about money in your golden years.
What Retirement Means to You
Retirement can mean different things to different people. It can mean that they have achieved all they could or that it is time for them to retire due to exhaustion. However, one should only retire when they have a financial retirement plan. You should also think about what you’re going to do once you stop working.
Retirement is a stage in life where, in a way, you get paid not to work. It can be viewed as a reward for all your decades of hard work. You can spend a lot more time with your family, friends, or enjoying your hobbies. However, you should be able to afford to retire and never again have to go back to a traditional job. Just remember — it is not an end, just another chapter.
When Should You Retire?
When is the right age to retire? Many people are wondering about this. The answer depends on the individual. However, the average retirement age is around 65. However, some people choose to retire earlier. Let’s look at the pros and cons of retiring at different ages:
- Forty-five years old: The pro is that you would have more time to do other stuff that you always wanted to do. However, the con is that you are in the middle of your productive years, which are said to be between the ages of 35 and 65. Well, some people may have the financial stability to do so; it does not necessarily mean that they are ready to do it. They could still have the energy and drive to do more and to look for more fulfillment in work. This is why many professional athletes or ballet dancers end up coaching or teaching. They could retire, but they want to do something more with their talent and skills.
- Fifty-five years old: Some people begin to get “bored” of their work around this age. They have done a lot, and they feel like there is nothing more they can do. The con is that many of their peers will still be working, and they might feel isolated.
- Sixty-five years old: The pro is that many people retire around this age. This can mean that you would have more company. This age comes ten years after the supposed productive years of your life.
People retire at various ages. You should do so once you’re ready financially and emotionally.
Prepare Yourself Emotionally
Something that is overlooked when people start to think about their future in retirement is that they will have a lot more free time. This is obvious, but what does it mean? Well, you have another eight to ten hours to fill. So what do you do with this time? That is why it is not only important to think about the financial side of retirement but also how to prepare for retirement emotionally.
This is said to be more difficult for men than women. Some men feel that their job is their life, and when that is finished, what then? That’s why it is important to figure out what to do to feel fulfilled when you retire.
Hobbies are a great way to spend your days in retirement, not only in terms of filling up your time. They will also make you feel like you’re accomplishing something. Many people turn to knitting, playing bridge with friends and family, or indulging in any other type of hobby that interests them. Some people find pleasure in joining clubs, such as a bridge club, book club, chess club, rotary, etc. This can give them a goal and provide opportunities for social interaction. Some people may even gravitate towards video games in the future.
The point is that you do not want to feel depressed or like you are a waste. You can think of hobbies or new interests as a type of retirement benefit.
It is important to have a financial strategy for retirement. Financial stability after retirement can mean that you want to live on the same or similar income that you had while working. However, it is often not the case. That doesn’t have to be a bad thing since people tend to need less money in this stage of life.
When you work, you want to have the latest outfits, but when you are retired, clothes usually don’t matter as much for example. Another thing you’ll pay less for is transportation. Since you don’t go to work, you won’t be spending that much on petrol or public transport.
As we have mentioned, you should start planning your retirement now. Being financially stable is extremely important, and you should look into having several retirement investments. Some of them could be personal finance or opening up a savings account, pension, real estate, stocks, traditional IRA, social security administration, etc. For freelancers, there are many private retirement account options that they could look into. With these, they would get what they put in monthly back plus an interest when they retire.
Another thing that should be part of your plan is to pay off your mortgage. This includes your houses and cars. You should only be concerned with bills.
One more thing you want to look into is where you would like to retire. Some places are cheaper to live in compared to others. Some people have holiday homes that they rent out while they work and end up moving into when they retire.
Retirement is all about planning in terms of finance and what to do in your future free time. No matter what you do for a living, planning carefully is necessary to make sure that you have a happy retirement.