Are you beginning to consider retirement and what this next chapter will entail? This is a moment filled with mixed emotions—excitement for the new chapter ahead but also a bit of anxiety about the unknown. Are you truly prepared for the big decisions that lie ahead?
Here are four crucial questions to consider before you retire, designed to help you feel confident and secure about your future:
- Downsizing your home: Consider the financial and lifestyle implications of moving to a smaller home.
- Relocating: Weigh the pros and cons of moving to a new location, including the impact on your social network.
- Timing your retirement: Decide when to stop working and explore the benefits of part-time work.
- Inheritance planning: Determine who you want to leave your assets to and consider estate planning options.
Should I downsize my main home?
Selling a house is a significant and often costly life transition. Moving from a single-family home to an apartment can be a wise decision, but it comes with its own set of challenges.
For example, you might face new rules and regulations that could affect your lifestyle. If you’re unhappy with your new home, reversing the decision can be financially burdensome. Weigh the pros and cons carefully before making a final decision.
Should I move somewhere else?
Downsizing is one thing, but relocating is another. It’s important to consider the potential impact on your social support network and the friendships you may be leaving behind. While better weather and lower taxes can be appealing, they may not fully compensate for the loss of close relationships.
For instance, moving to a new city might offer financial benefits but could lead to feelings of regret or homesickness. Moving can also be costly and logistically challenging, especially if you’ve already spent a significant portion of the proceeds from selling your previous home. Weigh the potential benefits and drawbacks of such a significant move before making a final decision.
When should I stop working?
Determining the right time to retire is crucial. It marks the end of your regular income and the start of drawing from your retirement fund.
However, there’s always the option of working part-time during retirement, which has many benefits. Not only does it provide some financial stability, but it can also give a sense of purpose to retirees. For example, you might choose to work part-time in a field you’re passionate about, which can help ease the transition into retirement.
Who do I want to leave the inheritance to?
Many successful family stewards prioritise leaving a substantial inheritance to their spouse, children, or a charitable organisation. If this is important to you, determine what you want to leave in addition to your own needs.
When consulting with your financial planner regarding estate planning options, consider the potential use of a family trust. Setting up a trust can help ensure that your assets are distributed according to your wishes and can provide significant tax benefits. Trusts can offer a range of advantages, such as protecting your assets from creditors, reducing estate taxes, and providing for family members who may not be able to manage an inheritance on their own.
Incorporating charitable giving into your estate plan can also be a meaningful way to leave a lasting legacy. By including charitable organisations in your trust, you can support causes that are important to you and make a positive impact on your community.
Thoughtful estate planning with the help of a financial planner can help you achieve your goals of providing for your loved ones and supporting charitable causes, while also maximizing the benefits of your assets.
Considerations
When thinking about these questions, it’s natural to lean towards options that reduce the risk of short-term financial loss and regret. However, selecting the emotionally comfortable choice now could lead to long-term financial harm. Research shows that you’re more likely to make better decisions if you’re emotionally engaged in tackling potentially tough retirement choices.
Consider these additional questions as you approach your retirement years:
- What would you consider to be a successful retirement?
- What kind of lifestyle do you really want to have?
- How can you control your costs?
- What are your plans for your later years and covering costs for your long-term care?
- What will happen to your business?
All these factors should be included in your financial plan, which can only be created when your planner truly understands you and your story. Try to envision your life in retirement. Only then will you invest the time it takes to determine how you can support the life you really want. Let us help you navigate your path to a fulfilling retirement. Contact our team for support.
