|
Retirement signals the beginning of a new lifestyle. Long before you clock out for the last time, consider whether you are financially ready to pursue the life that you envision for yourself.
Do you want to travel every year? Are you planning to spend more time in your garden, or do you want to downsize your lot? Are you properly insured?
Just as you would plan for a trip, it's even more important that you plan for retirement -- the longest vacation of your life -- with eyes wide open.
| Here is a
checklist of considerations you
should revisit as often as necessary
before taking the retirement plunge. |
|
 |
| 10 steps to a worry-free retirement: |
|
|
|
Prepare
a balance sheet. Certified Financial
Planner Bob FitzSimmons, who runs a firm in
Lincoln, Neb., recommends preparing a balance
sheet showing your assets and liabilities
to determine your net worth. Assets include
personal possessions of value, such as cash,
real estate and investments. Liabilities are
your debts and legal obligations. You can
prepare your balance sheet on an Excel spreadsheet,
a notepad with columns or Bankrate's net worth work
sheet.
Get
rid of debt. Head into retirement with
no debt on the balance sheet. "That's
the ideal world. It's psychologically the
most comforting," says FitzSimmons. If
you have debt, and retirement is on the horizon,
go after the debts with the highest interest
rates first. "You shouldn't go into retirement
with excessive credit card debt," says
FitzSimmons. Credit cards usually have the
highest interest rates, with car loans generally
coming in second. Rates on home equity loans
are a little higher than for a mortgage. Pay
off the mortgage last because it presumably
has the lowest interest rate.
Planners generally advise that
you look at the effective rate on your mortgage
(which takes the mortgage interest deduction
and real estate taxes into account) versus
the after-tax yield on what you could earn
with the money you would otherwise use to
pay off your mortgage. In retirement, however,
you don't have employment income but savings to use to pay the mortgage. Tapping
into retirement accounts could have serious
tax consequences. Bankrate's story, "Keep
the mortgage or pay off the house,"
sheds light on this subject.
Conduct
a house check. If remodeling takes
place pre-retirement, think about future needs.
Barbara Krueger, a senior housing marketing
specialist in Del Mar, Calif., and founder
of www.seniorresource.com,
recommends doorknobs and faucets with lever
handles that are easier to maneuver. Consider
installing a shower with a low threshold and
a shower seat. |
