When you reach the age when that far-off vision of retirement starts to come more directly into view, think about the issue carefully well beforehand. From considering when you'd like to retire and when you'd start collecting benefits to how your savings will be allocated when the time comes to hang it up, you'll be in a better position to enjoy that well-earned withdrawal from the workforce.
Keep in mind, women face some additional concerns about retirement because of a longer life expectancy. Reaching higher ages increases the likelihood of needing to pay for caregiving services and more extensive medical services. Add to this the fact that women tend to earn less than men throughout their career, and the wage gap becomes a factor even in retirement.
Considering your responses to these 10 questions can help you arrive at that life-changing destination ready to aptly handle and enjoy the road ahead.
1. Do I want to retire?
Feelings about retirement vary. Some 58 year olds are eager to get out the door, while some 72 year olds can't imagine not heading to the workplace each day. Especially to women for whom work is a vital part of their identity or social life, retirement may not seem all that appealing. Begin thinking about when you will be ready sooner rather than later.
2. What career-related goals would I still like to accomplish?
Before starting a new chapter in your life, evaluate where the existing one stands. If you've always had your eye on becoming president of the local chapter of your professional association, now might be the time to act. Or, maybe you feel a desire to impart knowledge to younger colleagues. Actively mentoring promising up-and-comers could help you leave a valuable legacy.
3. How much money will I need?
Figuratively — and perhaps literally — this is the million-dollar question. No magical one-size-fits-all answer exists, and trying to produce an educated estimate involves contemplating a variety of often-fuzzy factors (more on that in a minute).
Even financial planners debate how much money the average person or couple needs for retirement. Many professionals favor the 25x retirement savings rule — saving 25 times the annual amount you expect to spend in retirement. Others set the benchmark as 15% of your pre-tax salary.
Since individuals do not know their exact lifespan, judging how many years you'll need to cover proves tricky. Of course, the earlier you retire, the more your future must be considered. Instead of spending too much time contemplating how many years you're likely to survive (which, face it, isn't a whole lot of fun and probably not that accurate), ponder some vital and more controllable questions.
4. What am I planning to do during retirement?
Travel? Move closer to family? Become a snowbird? Cross everything off your bucket list? Golf? Watch TV and nap? Spend time volunteering? Plow your way through the mystery section at the local library?
Big dreams likely require substantial financial resources, whereas simpler pleasures tax your bank account less. Truly thinking about how you want to spend your "golden years" will help guide your savings plans.
5. What does my partner want to do during retirement?
Don't assume; have a conversation! Your nest egg (and your partnership) could be on the road to disaster if one of you expects to remain in your family home forever while the other plans to sell the place for life on the road in an RV. Growing old together involves figuring things out as a team.
6. How will I cover health insurance?
Medicare eligibility typically occurs at age 65. Individuals retiring before that milestone birthday generally need to purchase their own medical coverage, which can prove quite expensive. Look into your options well before you say goodbye to your employer and its group insurance plan. If you have a health savings account (HSA), explore ways in which it can help you save money toward future medical expenses.
7. Do I need or want to leave money to someone or something?
Whether you want to ensure your disabled adult child continues to receive care, your grandkids have money to pursue educational goals, or a charity close to your heart receives a final donation, take these scenarios into account when contemplating retirement savings.
8. How much have I already saved, and what money will be coming in?
After gaining a handle on the monetary amount you'll need in retirement, examine where you currently stand financially. Look at figures in retirement savings accounts. Figure out if and when you'll collect social security, the amount per month, and how the age when you start collecting influences payments. Add in any other sources of income. Then, compare your projected need with where you actually are finance-wise.
9. If my retirement finances look bleak, what can I do?
Holding off on retirement and socking away as much money as possible during this extra time of employment is a popular strategy. Some women retire from one job but take on part-time, consulting or gig work to supplement retirement income. Revising post-retirement travel plans, downsizing, or moving to a less-expensive area after retirement also can help.
For more suggestions, this Forbes article offers catch-up strategies based on your current age.
10. Should I seek help regarding retirement planning?
Having the financial means to take care of yourself during your later years is no light matter. If you feel frustrated or confused about how much you'll need and how to reach that goal, consulting a financial planner could prove a wise investment.
Plenty of other resources exist, too. Financial institutions, libraries, community colleges, park districts, and trade associations often hold free or low-cost seminars on retirement topics. Be sure to check with your HR department for potential educational sessions geared toward your particular company savings plan.