When the topic of retirement comes up, you may find yourself asking more questions than you have answers for. Will you have enough money when you retire? How much can you afford to invest? How will retirement affect your relationship with your spouse and your family? One solution that has recently started becoming more common is rehearsing your retirement. This can be a fun way to find the information you need without making any long-term commitments.
In an article in The Wall Street Journal, Holly Kylen, a Pennsylvania financial advisor, recommends that clients who are questioning their retirement financial stability play out their financial plan—or simulate it—before actually implementing it. Simulating your retirement plan offers the benefits of both taking the fear out of the equation and highlighting areas that might need some tweaking.
“It’s a powerful thing to simulate before you act,” Kylen says. “It gives you the confidence and sometimes the push you need to do what you’ve got to do.”
Retirement age today isn’t the standard it once was. Some people might retire at 65, while others might choose or need to work into their 70s. Still others might enjoy an even earlier retirement. The fact is, retirement can last anywhere from 20 to 30 years, so it’s important to be prepared both financially and emotionally, and one way to effectively accomplish this is to rehearse your retirement. Here are some steps you can take to help you and your family be better prepared for retirement:
Take different retirement lifestyles for a test-drive. Give your retirement dream a short-term try to see if it’s something you really want to do. If you dream of driving cross-country in an RV, for example, try renting a camper for a week or two. Deciding beforehand if your retirement dream is actually something you want to do is important and can help avoid expensive changes in the future.
Live with your spouse 24/7. Chances are you and your spouse both work at least part-time now, but come retirement, you’ll be spending a lot more time together. Try spending a few days together for the whole day and acclimating yourselves to each other’s routines and hobbies.
Try living on your retirement budget. Your retirement income will likely be significantly less than what your income is currently; try living on a reduced income for a month or two and establish if you can realistically afford your lifestyle or evaluate what habits might need to go.
It goes without saying that a significant portion of preparing for retirement is having your finances in order. Christine Douglas of USA TODAY notes that experts suggest individuals planning for retirement take the following financial details into consideration:
- Know your expenses. Look at your expenses and understand what they are. If you have significant debt, it’s important to work this off before you retire. If you don’t, your nest egg will become depleted much faster.
- Know your assets. In addition to knowing how much you have set aside, you need to know the value of any pension benefits and Social Security you will receive. Know your desires. Retiring doesn’t have to mean not working at all. If you still want to work part-time or possibly try out a different career, you can; recently, AARP launched a new social network called Work Reimagined that can help older individuals find jobs.
Planning for retirement may seem like a daunting task, so rehearsing or simulating your retirement can help you address questions that you may otherwise not be able to answer.