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25 RETIREMENT QUESTIONS THAT DEMAND AN ANSWER FOR RETIREMENT
Nobody teaches you how to retire in school, so you may not know what’s most important when planning for retirement. Here are some of the first retirement questions to ask as you imagine your transition out of the workforce. As you move through this list, you’ll likely uncover additional questions (and answers) that provide valuable insight.
If retirement is looming in your future, you may wonder about how exactly this next phase of your life will play out. From when to start collecting benefits to how exactly money will end up in your bank account each month, the process of starting retirement can seem like a mystery.
To help you understand the key milestones of retirement and allocate funds strategically, you should assess your own financial situation and consider the best ways to maximize benefits.
A few of the key retirement questions that need an answer (or you should ask) include:
- How do I retire?
- When can I retire?
- How much money do I need to retire?
- How much will I spend in retirement?
- Should I retire early?
- When should I take Social Security?
- How do I apply for Social Security benefits?
- How much will I pay in taxes in retirement?
- Should I take my pension as an annuity or a lump sum?
- How will I afford medical expenses in retirement?
- Should I pay off my mortgage before retirement?
- How should my money be invested once I retire?
- What will I do in retirement?
You can work through these questions yourself or ask a Reitenbach-Kissinger Institute Financial Coach to help you project how your retirement might unfold.
ASK YOURSELF THE FOLLOWING INTAKE QUESTIONS
: How Do I Retire?
Leaving the workplace may be as simple as filling out paperwork with your human resources office but replacing a paycheck can be more difficult. Logistically, are you asking, “How am I going to make that happen?” Do you want to know about how to move from the steady income of the workplace to living off your retirement savings.” The answer is usually found by sitting down with a finance professional coach and determining how much to pull out of retirement accounts and on what schedule.
: When Do Most People Retire?
You can retire whenever you have the financial resources to stop working, but sometimes that’s not a choice. In fact, 40% of people reported being forced into retirement earlier than planned, primarily due to healthcare issues (caring for themselves or a loved one) or changes at their job. That statistic comes from the Employee Benefit Research Institute (EBRI). The median retirement age is 62, according to EBRI.
: When Can I Retire?
The short answer: You can retire when you want to leave the workforce and can afford to do so. However, in reality, people may have many constraints on when they can leave the workforce.
For instance, some employees may have to work 20 or 30 years to be eligible to receive a company pension. Those who need Social Security to retire can’t begin collecting benefits until age 62 at the earliest. And Medicare doesn’t begin until age 65, meaning workers who receive health insurance through an employer may wait until then to retire.
: If I Work Longer (or Part-Time in Retirement), Would it Be Beneficial?
Working longer can dramatically improve your chances of retirement success. The strategy can help in several ways:
- Improve Social Security and pension calculations: Social Security looks at your 35 highest-earning years to calculate your monthly retirement benefit. Pensions might look at your highest three years of earnings. By working more (typically in your best earning years, after you’ve earned promotions and seniority), you can improve those numbers.
- Delay taking Social Security or pension income: By starting retirement income at a later age, you typically get more each month.
- Fund fewer years of retirement: It may sound morbid, but you reduce the number of years between your retirement and your death. As a result, it’s easier to fund retirement.
- Opportunity to save more: As you keep working, you might be able to set aside funds in a retirement account—maybe even with matching funds from your employer.
: How Much Money Do I Need to Retire?
The amount you need depends on several factors, like your age at retirement, how long you live, and how much income you get from pensions or Social Security. If there’s a gap between your spending need and your retirement income, you’ll need to fill that gap by taking withdrawals from your retirement savings.
Three of the most important factors are how much you’re going to withdraw, for how long, and any earnings or losses on your savings. You can learn more and see a chart with savings “checkpoints” in a detailed article on how much money you need. The amount you need might range from several hundred thousand dollars to a few million dollars.
It all depends on what you plan to spend in retirement. People should work with an advisor to determine how much is needed to meet their specific retirement goals.
: How Much Will I Spend in Retirement?
To determine how much you need to retire, you need to understand how much you’ll spend. Fortunately, that’s not as hard to calculate as it might seem. “It’s not a guessing game at all. Financial advisors can use a person’s spending habits, expected inflation and life expectancy to determine how much they will reasonably need in retirement.
: Should I Retire Early?
No one can answer that but you. However, financial advisors can run through a number of what-if scenarios to help a worker determine the best time to retire from a financial perspective. These scenarios can consider whether retiring early could lead to a shortfall of money later.
: When Should I Take Social Security?
Workers can take Social Security as early as age 62, but they will permanently reduce their monthly benefits by 25%. The full retirement age for those born from 1943-1954 is 66, and seniors can get up to an 8% bump in benefits for each year they delay their claim up to age 70.
Those who plan to continue working full-time until their full retirement age should think twice about taking early Social Security benefits. There is a benefits penalty of $1 for every $2 you earn above $17,640 in 2019 if you are younger than the full retirement age. And some may worry about Social Security running out of money and take their benefits early for that reason. However, we are optimistic that the program isn’t going bankrupt, and these concerns shouldn’t drive the decision of when someone begins benefits.
: How Do I Apply for Social Security Benefits?
There are three ways to apply for Social Security benefits. Retirees can complete an online application through the Social Security Administration website or call 1-800-772-1213 to apply over the phone. The final option is to visit a local Social Security Administration office and apply in person.
: Will Social Security Run Out of Money?
You’ve undoubtedly heard that Social Security is struggling due to demographic changes. However, it’s unlikely that your benefits will go away completely—especially if you’re at retirement age right now. However, reductions are always possible, and younger workers should be more prepared for a less-generous Social Security program.
Most news focuses on the Social Security Trust fund, which was projected to run out of money around 2035. As a result of COVID-19, the fund could run out closer to 2029. But the Trust Fund provides only a portion of your monthly Social Security payment. The rest of the money (about 76% of the funds needed) comes from payroll taxes that workers pay every year.
Given all of that, it’s likely that you’ll continue to receive Social Security income for the rest of your life. The amount might change, and the degree of those changes is unknown, but it’s unlikely that your benefits will go away (and drastic changes seem unlikely for most people, as well).
Be aware that numerous small tweaks could fix Social Security. You might not notice those changes, if enacted, and you’d continue to receive benefits.
: How Much Will I Pay in Taxes in Retirement?
A tax professional can likely estimate your effective tax rate in retirement. Some retirement savings, such as traditional 401(k) or IRA accounts, are taxable, while money from Roth accounts is exempt. Depending on how much income you have in retirement, a portion of your Social Security benefits may be taxable, too. In addition to calculating expected federal taxes, we recommend workers not to overlook state taxes.
: What Will Taxes in Retirement Look Like?
Taxes reduce the amount you can ultimately spend in retirement, so it’s crucial to understand how much after-tax spending you can afford. A detailed financial plan with year-by-year cash flow projections can help you understand the impact of taxes.
When you withdraw money from pre-tax retirement accounts, you typically report that amount on your taxes and you may owe income tax. Those accounts include things like traditional IRAs, pre-tax 401(k) or 403(b) balances, SEP and SIMPLE plans, and more. Withdrawals from Roth-type accounts may come out tax-free—as long as you meet all IRS requirements.
Retirement income can also cause tax consequences. In many cases, your pension income is taxable. Social Security income may also be partially taxable, depending on other items on your tax return. You could potentially owe taxes on up to 85% of your Social Security benefit.
With smart planning, it may be possible to optimize the amount you pay in taxes and maximize the amount you can spend. Strategies include planning when and how you take income and withdrawals from different sources. It could even make sense to pay taxes before you really need to—on purpose—in an attempt to avoid higher taxes down the road. Roth conversion strategies do just that.
: Should I Take My Pension as an Annuity or a Lump Sum?
This is a decision best made with the help of a finance and tax professional. Taking a lump sum payout may sound appealing, but we caution, “You’re going to have a significant tax bite out of that.” Annuitized payments may lessen and spread out the tax burden.
: How Will I Afford Medical Expenses in Retirement?
While most retirees are eligible for Medicare at age 65, early retirees may need to bridge the gap between when they lose their workplace benefits and begin their government coverage. That may mean buying an individual policy through the health insurance marketplace. Insurance plans purchased through the marketplace may be eligible for government subsidies that lower out-of-pocket costs for retirees.
Nobody teaches you how to retire in school, so you may not know what’s most important when planning for retirement. These are the first retirement questions to ask as you imagine your transition out of the workforce. As you move through this list, you’ll likely uncover additional questions (and answers) that provide valuable insight.
You can work through these questions yourself or ask a financial advisor to help you project how your retirement might unfold.
: When Should I Claim Social Security?
For many people, it’s best to wait until your full retirement age (or later) to take your Social Security retirement benefit. You can claim as early as age 62, but when you do that, you get a reduced benefit. That reduction can end up costing you over the long term, and if a surviving spouse takes over your payment after your death, they will be stuck with that reduced amount.
You can delay claiming until age 70, which results in an increase of roughly 8% per year (technically, the calculation looks at each month, so you don’t have to wait until your birthday). But after 70, there’s typically no benefit to waiting.
If you have known health issues that will result in a shorter-than-average life, it could make sense to claim earlier. It also makes sense in other limited circumstances, but it’s critical to understand that you may lose out on a substantial amount of money when claiming early.
: How Much Will Healthcare Cost in Retirement?
Healthcare is an ever-changing piece of retirement. But during your working years, your employer probably paid premiums for you. When you retire, you’re responsible for those costs. You will likely use Medicare when you reach age 65, and you can buy additional coverage to augment traditional Medicare (known as Medigap or Medicare Advantage plans).
For an oversimplified estimate, a 65-year-old woman might expect to spend roughly $7,000 on healthcare in her first year of retirement. But healthcare is more complicated than that, and costs rise as you age. Fidelity says that a couple might spend $295,000 out-of-pocket on healthcare costs during a typical retirement. That includes premiums, copays, dental and vision care, and other items—but ignores potential long-term care costs.
If you retire before age 65, it’s even more complicated. You may need to buy insurance from a private carrier, switch to a spouse’s plan (if that’s an option), or use COBRA or your state’s continuation program.
A bigger concern is long-term care coverage. “What if you could not live in your own home?” Speiss asks. Medicare doesn’t cover ongoing custodial care such as that provided in assisted living or nursing home facilities. To pay for this, retirees could use long-term care insurance, a reverse mortgage, or personal savings. Once someone’s assets have been depleted, Medicaid may provide this coverage to those meeting income requirements.
: Should I Pay Off My Mortgage Before Retirement?
For those who itemize deductions, a mortgage interest may reduce taxes. If the interest rate is low enough, it may also make more financial sense to invest money rather than pay off the debt. However, it comes down to personal preference. “It’s important to balance the hard math with what allows you to sleep at night,” Ryan says.
What’s more, retirees need to consider how paying off a mortgage could impact their ability to live comfortably in retirement. “I think it’s a good thing to go into retirement without debt,” but we don’t think it makes sense to rob a retirement account of $100,000 to (pay off) a house.”
: How Should My Money Be Invested Once I Retire?
Since retirees may be living largely off their savings, that money needs to be protected in case of a recession or market downturn. We should be more conservative in your retirement,. However, retirement savings also need to earn enough gains to keep up with inflation. A financial advisor should be able to recommend the right mix of bonds, equities, and other investments to keep some money safe while allowing a portion of the portfolio to grow.
: What Will I Do in Retirement?
This is the question many workers fail to ask themselves even though it’s essential to a happy retirement. We have seen many clients spend six months to a year getting acclimated to retirement, only to then find it boring after that. In some cases, they go back to work because they aren’t sure what else to do. We advise workers approaching retirement to give thought to how they would like to spend these years. We need to have very specific goals for the time we have.
: I Get a Pension. What Happens if My Former Employer Goes Bankrupt?
You’re relying on income, but the world is changing, and some businesses may have trouble meeting their obligations. Fortunately, many retirees are protected by the Pension Benefit Guaranty Corporation, an agency of the U.S. government.
The details are complicated, but if your employer goes under, you might still receive pension income, up to certain limits. For 2021, the maximum monthly benefit for a 65-year-old was $6,034 per month. If your pension is higher than that, you might experience an unfortunate reduction. Something is better than nothing but losing pension income can be extremely painful.
: I’m Still Young—What Should I Do to Plan for Retirement?
As you work toward retirement, the most important things you can do are save money and maximize your income. Also, living below your means is helpful—it helps you save money, and you’ll be able to live on a lower amount in retirement, which is more important than most people realize.
You can receive coaching on: How to retire from start to finish with a Reitenbach-Kissinger Institute Retirement Coach.
- Build Up Savings
- Manage Your Assets
- Know Your Need
- Plan Your Income
- Monitor Your Progress
- Stay Healthy and Engaged
Including tips on where to save money and how much to save. It’s important to be a smart investor as you accumulate assets, but investing isn’t necessarily the most important thing, and it’s easy to get lured into fancy investing strategies that hurt your chances of retirement.
: How Will Retirement Change My Life?
Non-financial questions might be just as important (or more important) than financial issues.
- You know that you’re retiring from work, but what are you retiring to? Having something to look forward to is important.
- If you previously found meaning through work, how might you find meaning during retirement?
- If your social network was primarily centered around work friends and after-work activities, who will you spend time with?
- Will your sense of identity (or the way you think others view you) change when you no longer work in your profession?
: How Can I Get Help Planning My Retirement?
There are several ways to get insight on your retirement finances.
Online calculators and tools can help you run numbers and estimate your likelihood of success. Be sure to use several different calculators and compare the results. Different sources use different assumptions, and it’s critical to view your retirement finances from a variety of angles.
Any of the big-name calculators online are a fine place to start, but you need to know that you’re using a template that isn’t customized (and might not work the way you hope it will).
For more detailed advice—ranging from a quick second opinion to detailed cash flow analysis and investment advice—you can work with a Reitenbach-Kissinger Institute Financial Coach. It’s best to work with a Fiduciary Advisor or planner who is legally required to act in your best interests, avoid conflicts of interest, charge reasonable fees, and disclose important information (including how much you pay).
: Am I Going to Be, Okay?
This is the big one, and all of the questions above provide more detail on this essential question. If you’re not interested in the boring details of your finances, you can ask a Reitenbach-Kissinger Institute Financial Coach, who should include all of the answers above in your retirement plan.
6 Ways a Life Coach Can Improve Your Retirement
Using a life coach for retirement might sound crazy, but it’s not. While some people prepare for the financial aspects of retirement, it is not clear how many people develop clear plans for the non-financial aspects. Both are important. A Reitenbach-Kissinger Institute financial coach can help you with your finances. A retirement coach can help you be mentally and emotionally prepared for what happens when your career ends.
: What is a Life Coach? What is a Retirement Coach?
The first time Newsweek wrote about life coaches, they defined the profession this way: “Part consultant, part motivational speaker, part therapist and part rent-a-friend, coaches work with managers, entrepreneurs and just plain folks, helping them define and achieve their goals–career, personal or, most often, both.”
A retirement coach is all of these things, but they are really focused on the challenges and opportunities of retirement. Retirement is a big deal and it can be a hugely different lifestyle from what you experienced while working.
In fact, retirement is arguably the biggest transition you have ever had. This is the phase of life where you have the most control over your time. A retirement coach can help you decide how and with whom you want to spend it. They can also help you create a plan for the mental, social, physical, and spiritual changes that take place in retirement.
: A retirement coach can help you make the most out of this phase of your life. Consider how a retirement coach could help you with these six specific aspects of retirement:
A. Identifying What is Important to You
This is your chance. This may be your last chance. This may be the only chance you have had in your entire life to spend your time entirely how you want to spend it. What is important to you? How do you want to be defined? How do you want to be remembered? What will motivate you to get out of bed each day if you don’t need to report to a job?
However, identifying what is important to you and choosing from a whole world of opportunities for how to spend your time and energy can be overwhelming. At the risk of sounding cliche, a Reitenbach-Kissinger Institute life Coach can help you identify your passion and a plan for pursuing it.
B. Measuring Personal Success
During your career, you may have measured personal success by pay, title, or feedback from bosses and coworkers. In retirement, there are no such gauges. And, for a certain type of person, it can be really difficult to lose those guideposts. In fact, depression is a common side effect of retirement for just this reason.
Success means something different to every retiree. Maybe it’s continuing to work at a job you love on your own schedule; perhaps it’s devoting time to a cause that is near to your heart. Maybe it’s defined by your relationships with family and friends, or learning and doing new things. Perhaps it is your golf handicap or your ability to travel.
A Reitenbach-Kissinger Institute Retirement Life Coach can help you pinpoint what matters most to you and help you learn to define and measure personal success based on another set of gauges.
C. Developing a Schedule
One of the biggest changes accompanying retirement is the change in how we use our time. For most adults in full-time jobs, work schedules provide the structure that the rest of our lives are organized around, and freedom from those time constraints is the central dream of retirement. We imagine lives that will be simultaneously rich and relaxed, full without the stress of our work lives. But this freedom can be a double-edged sword; it can leave us feeling unmoored.
People tend to dive into retirement in one of two ways.
- Some schedule their days to the hilt, filling their calendar with recreation, travel, classes, and volunteer work. This is great fun until the endless recreation and activity just become too tiring.
- Others take a go-with-the-flow approach, waking up when they want and doing what they want when they want. But many find themselves mindlessly watching TV while days pass without meaning or memories. The key is to create routines and a schedule that gives you a reason to get going each day, but not so much rigidity that you’re left feeling burnt out.
A Reitenbach-Kissinger Institute retirement life coach can help you create a daily routine that involves getting out of the house, meeting new people, and learning new things. Creating healthy routines in retirement can help you stay productive, recover lost enthusiasm, and increase your feelings of happiness and well-being.
D. Planning for Good Health and Accepting Physical Limitations
Maybe you have always been fit and healthy. Or, perhaps your diet and exercise regime could use some help. A Reitenbach-Kissinger Institute Retirement Coach can help you create a plan for well being.
They can also help you if you find yourself with some physical limitations. Many people find themselves less physically able to engage in their favorite hobbies, drive themselves to appointments, or even take care of things around the house. Adjusting to this loss of independence is difficult.
A Reitenbach-Kissinger Institute Retirement Life Coach can help you adapt to that loss and reimagine retirement based on a different set of abilities. They can also help you explore new hobbies and activities that will help you stay mentally active even if your physical abilities are diminished.
E. Changing Social Circles
Working adults often spend a good portion of their workday interacting with coworkers and colleagues. Sometimes the friendships built at work last a lifetime, but sometimes retirement can unexpectedly bring an end to workplace friendships, especially if those friends are still working.
Other aspects of retirement can change your social circles. Neighborhood friends may be lost when old neighbors move away and younger neighbors move in. Other friends may be dealing with illness or become a caregiver to someone else and not have time or energy for friendships.
If you find yourself missing close friendships in retirement, it is possible to make new friends or reinvigorate old relationships, but it requires facing fears and taking a chance to reach out to others. A Reitenbach-Kissinger Institute Life Coach can help you make new friends, deal with conflict with friends and family members, and recognize when certain relationships are not healthy.
Your social network may be one of the most important aspects of retirement well being. Therefore, it is worth nurturing.
F. Develop a New Relationship with Your Spouse and Other Family Members
Divorce in retirement has become much more common than it was just a couple decades ago, and it can take a devastating financial and emotional toll. In retirement, many couples simply find that they no longer have anything in common, and with people living longer after normal retirement age, they don’t want to spend the next 20 to 30 years with someone to whom they no longer feel connected.
Reitenbach-Kissinger Institute Relationship Coaching may be able to help retirees make progress in their relationship to avoid divorce. Unlike relationship therapy, which often focuses on the past and “what went wrong,” relationship coaching focuses on building toward something better, and it can be effective even if only one spouse participates.
Even if you still married to your spouse, relationships change in retirement. You may also find that relationships with your children and grandchildren change in retirement. You will find yourself needing to make more conscious choices about how much time you want to spend with various family members now that you have less constraints on your schedule.
How Much Does a Retirement Coach Cost? Is It Worth It?
Of course, one of the first questions you may have about hiring a Reitenbach-Kissinger Institute Life Coach is what it will cost. While rates can vary widely based on location and specialization, Reitenbach-Kissinger Institute Life Coaches charge between $200 and $300 per hour.
That’s not a small investment, but it is cheaper and perhaps more effective than a therapist or consultant, and how can you really put a price on making the most of your time and focus.
Financial coaching is a relatively new field and, as such, is not bound by any regulatory standards. That means financial coaches do not necessarily need any formal education or training to become coaches, nor do they need to be certified or licensed. In fact, anyone can become a financial coach if they so choose.
While anyone can be a financial coach, not everyone can be a financial advisor. In order to be a financial advisor, you must be licensed and registered with the Financial Industry Regulatory Authority (FINRA), which regulates the financial services industry.
Reitenbach-Kissinger Institute makes no recommendations on how or what to do with your money. For example, we cannot give you specific advice about investing, nor make a recommendation on what stock to buy. The Reitenbach-Kissinger Institute Retirement Coaches does not make recommendations on how or what to do with your money nor do they make recommendations or guarantee on any result you may get as a result of following our advice.
You may have a happy and productive retirement without coaching, but if you feel stuck or find there is a gap between where you are and where you want to be, a Reitenbach-Kissinger Institute Retirement Life Coach can help you get clear about the kind of retirement you want and help you get there faster.
The Reitenbach-Kissinger Institute Retirement Coaching program is a great fit for anyone who wants to become a Financial Coach, or use coaching skills in their work as an educator, counselor or planner.
Wishing you success.
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