8 Questions to Ask Yourself Before Retiring
NEW YORK ( MainStreet) -- Pulling the trigger on retirement can be a costly mistake if your finances aren't in good shape.
"It's a very uncertain time for people," says Doug Kinsey, a certified financial planner with Artifex Financial Group . Luckily, there are steps you can take to make yourself feel more secure as you approach retirement age. How can you tell if you're ready to retire the way you imagined? Here's a checklist of questions every pre-retiree should examine.
|Pulling the trigger on retirement can be a costly mistake if your finances aren't in good shape.|
What kind of lifestyle do I want in retirement?
Several studies have tried to pinpoint how much money people should specifically have on hand before they retire. The truth is, though, that this amount is going to vary dramatically depending on what type of lifestyle you're looking to lead once you've left the workforce.
"Your entire financial plan is going to stem from that vision," says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial (AMP) . She suggests considering where you see yourself living, whether you plan to get another job during retirement and how you plan on spending your time.
"Free time is very expensive," agrees Diana Palmer, a certified public accountant with Family Financial Planning . "If you like to travel, your budget needs to be set much higher."
Will my debts be paid off?
Unpaid debts will contribute to your monthly expenses and play a huge part in how much money you will need to have on hand before you go ahead and leave the workforce. This is not to say your house needs to be paid off in full before you retire.
"If you have a low interest rate
If you have other debts on the books, such as high credit card balances, you may want to look into what other factors may be behind the balances so you can get them paid off as much as possible before you abandon a steady paycheck.
How will I pay for health care?
All of the financial advisers we spoke with reiterated the importance of factoring in health insurance premiums and prescription drug costs when deciphering how much money you will need in retirement.
Additionally, under federal law, most Americans are not eligible for Medicare until they are 65 or older, so if you're looking to retire before then you will need to determine where your health care coverage would be coming from and factor that plan's cost into your overall budget.