As Einstein once said, “The most important thing is not to stop questioning.” In today’s Lifetime Income podcast, we discuss the five most important topics and questions to ask when preparing for retirement.
Even if you are already retired, there are a number of important questions that you should still be asking yourself and your spouse.
First, for those that haven’t yet retired, the most important question to ask is “What age do I want to retire?”
This is the decision that drives many of the other issues that follow because it determines the amount of assets you need and the amount of time it’ll take to meet your retirement goals.
The second question that couples should ask is “How do we want to spend our retirement?”
“This is a very important one next to the age you decide to retire,” Jim Puplava tells listeners. “What do you really want your retirement to look like? What will you do with all that free time? Do you take up another career, work part-time in your existing field or, quite honestly, find something entirely different to do with your life?”
When it comes to the above and finding the greatest self-fulfillment in retirement, Jim says to look for ways in which your natural talents and personal passions converge and recommends the reading the book, Finding Your Element: How to Discover Your Talents and Passions and Transform Your Life.
The third question to ask is “Can I afford to retire when I want?” This may sound like a simple question but it’s a bit tricky to answer and will depend on who is doing the work and the assumptions they use.
For example, many retirement or financial planners will use long-term historical averages for calculating future rates of return on the assets you hold. Unfortunately, as we’ve explained many times, without taking into account valuations—how richly valued something is relative to historical averages—the conclusions drawn may end up being highly flawed.
These types of calculations and assumptions will make a very big difference over time, which is why working with a qualified retirement specialist can be helpful. At minimum, make sure you know the assumptions being made and where they could go wrong when it comes to whether or not you can afford to retire at a certain age.
If it’s clear that you can’t afford to retire, there’s always the option of moving to a state with a lower cost of living or retiring overseas. As International Living’s Dan Prescher told Financial Sense Newshour earlier this year, moving abroad is an effective way to stretch your hard-earned dollars much further. Where’s a good place to do just that? According to Dan, Costa Rica is one of the best places for people to retire.
The fourth question for couples to ask is “Do we have a contingency plan in place if there’s a significant disruption or reduction to our income?”
This can take many forms and is something we’ve dealt with in many cases with our own clients. A premature death of a spouse, loss of a job, or unforeseen medical expense are all common examples that could significantly disrupt plans for retirement. Fortunately, there are contingency plans that be taken before or after these events to help.
The fifth question to ask is “How much risk am I willing to take in my portfolio for retirement?” This will most certainly depend on how old you are currently. The younger you are, the more risk you can take since you have more time to make up for a market correction. As you age, however, preservation starts to take more precedence than growth.
Advisory services offered through Financial Sense® Advisors, Inc., a registered investment adviser. Securities offered through Financial Sense® Securities, Inc., Member FINRA/SIPC. DBA Financial Sense® Wealth Management.