by  /  News, Retirement Planning

Today we discuss five questions to ask yourself five years prior to retiring.

How Long Will You Live?

  • This is my default response to the question “Do I Have Enough Assets to Retire?”
  • Mortality tables indicate that a male age 65 has a mortality age of 84, meaning that half of all men who are 65 today will die before age 84 and the other half will still be alive, needing assets to live.
  • Also, while a male age 65 has a 50% chance of living to 84 and a female age 65 has the same 50% chance of living to 86, as a couple, they have a 45% chance of one of them living to age 90.
  • My father is going strong at 95, which sounds like a good number to plan on. Retirement assets should last at least 30 years.

Where Will You Live?

  • Different zip codes can have very different costs of living.
  • If you live close to family members, it could lower travel expenses, but raise other expenses.
  • Some areas may offer more opportunities for part-time work or business activities.
  • Lifestyle issues such as climate, cultural and recreational opportunities and access to effective medical care should all be considered.

What Will You Do?

  • Will you spend your time generating expenses or income?
  • Extensive first class travel, Broadway shows and gourmet dining can be expensive over time.
  • Work during retirement saves expenses on travel and entertainment, while generating income.
  • Volunteer work can be rewarding, emotionally, psychologically and (perhaps) financially (income tax deductions).
  • Starting a business during retirement should be quite rewarding on several levels and eventually be profitable. Resources will be needed for start-up expenses and funding losses from early operations. Early cash drains hopefully result in later cash gains.

 How “Large” Will You Live?

  • Whether you are traveling, working or hanging out at home, you can do so in a “large” or in a “simple” manner. Nothing is wrong with “living large,” you just must budget for it.
  • Some retirees scale back in retirement and live the simple life. Pursuits might include gardening, taking long walks and reading great books. You can do a lot with little if you enjoy living simply.
  • Other retirees feel they have been imprisoned in an office for 30 years and are entitled to live the good life. They want to travel, eat out often and well, explore expensive hobbies and “live the dream.” This can require great resources, but can be rewarding if you can afford it.

How Lucky Will You Be?

  • Your future health is perhaps the largest unknown variable.
    • While our life expectancies continue to increase, no guarantees can be made as to what the quality of life for these extended years will be.
    • Medicare and medigap supplemental insurance will handle the bulk of the major medical expenses, but not long term assisted living or nursing home expenses.
    • The healthier you are, the more likely you are to need long-term care for the frailties that come with extended lifespan. Long term care insurance is a good hedge against these expenses.
    • The recent sharp spikes in medical expenses beg the question of what they might be in 20 years. Medical expenses are likely to become an ever higher percentage of retirement expenses. Chronic issues, such as Alzheimer’s, can be devastating to a budget.
  • Your Family could have significant financial needs. Economic risk and divorce risk can be hard on your children and grandchildren.
  • Economic disasters, such as the Great Recession of 2008, can wreak havoc on your retirement assets. Many retirees returned to work after their retirement assets were ravished by a 50% drop in the stock market.
  • Physical disasters, such as floods, tornadoes or hurricanes occur too often, sometimes with ruinous effect. Complete insurance coverage is a necessity.

None of us knows what lays in wait for us during retirement. It is prudent, however, to ponder these issues far enough in advance of your retirement date, to enable you to make appropriate changes in your plans or delay your retirement date until adequate resources are available.


Remember, it’s not what you make that matters…it’s what you keep!

The general information herein is not intended to be, nor should it be treated as tax, legal, or accounting advice, nor can it be used for the purposes of avoiding tax penalties.  Please seek advice from an independent tax advisor before acting on any information presented.