The question of whether you're emotionally and financially read to retire is more complicated than it appears because it demands consideration on two levels.
First, there's the emotional component—are you ready to enter a new phase of life? Do you have a plan for what you would like to accomplish or do in retirement? Have you thought through both the positive and negative aspects of transitioning into retirement? Second, there's the financial component—can you afford to retire? Will your finances support the retirement lifestyle that you want? Do you have a retirement income plan in place?
What does retirement mean to you?
When you close your eyes and think about your retirement, what do you see? Over your career, you may have had a vague concept of retirement as a period full of possibility and potential—a reward for a lifetime of hard work. Now that it is approaching, you should consider more specifically what it is that you want and expect during retirement.
Do you see yourself pursuing hobbies or traveling the world? Have you considered volunteering your time, going back to school or starting a new career or business? It's important to give these possibilities some consideration and create a plan of action. If you haven't—for example, if you've thought no further than the fact that retirement simply means that you won't have to go to work anymore—you may not be ready to retire.
Don't underestimate the emotional aspect of retirement
Many people define themselves by their profession—their self-worth comes partially from relationships and achievements made in the workplace. Giving up that career, then, can be a challenging transition. Your job also provides a certain structure to your life—without something to fill that void moving forward, you may find yourself scrambling to address unmet emotional needs.
While many see retirement as a new beginning, others see it as a transition into the final life stage or “the beginning of the end." Some retirees, even those who have the full financial capacity to live the retirement lifestyle they desire, can't bear the thought of not receiving a regular paycheck. For these individuals, it's not necessarily the income that the paychecks represent but the emotional reassurance of continuing to accumulate funds.
Additionally, retirement is not always a solitary decision. If you're married, consider whether your spouse is ready for you to retire. Does he or she share your ideas of how you want to spend your retirement? Many married couples find the first few years of one or both spouse's retirement a period of rough transition. If you haven't discussed your plans with your spouse, make an effort to do so—think through the repercussions of retirement and consider how it might affect your relationship.
Can you afford the retirement you want?
Separate from the issue of whether you're emotionally ready to retire is the question of whether you're financially ready. In other words, can you afford to live comfortably and do everything you want in retirement? The answer to this question depends on your goals in retirement (i.e., how much the lifestyle you want will cost), the amount of income you can count on and your personal savings. It also depends on how long of a retirement you want to plan for and what your assumptions are regarding future inflation and earnings.
Planning for the financial and emotional impact of retirement can be overwhelming, which is why Busey offers retirement planning services to our customers. To learn more about the comprehensive services offered by Busey Wealth Management, visit busey.com/wealth-management.
This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.
This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.
This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.
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