Retirement Planning Questions to Ask in Your 40s and 50s

Factors to Consider as You Explore These Retirement Planning Questions

Regardless of how you envision the upcoming phase after retirement, it’s crucial to make the most of the savings you’ve diligently accumulated and avoid endangering your retirement plans. 

When preparing for retirement, it’s important to take into account the following factors:

• The current mix of investments in your portfolio
• Your current assets
• Your anticipated future assets vs. income
• When you want to start receiving Social Security
• How you’ll pay for healthcare costs
• The tax impact of drawing down your assets over time

As you consider the above list, do you feel confident about retiring according to your desired timeline and lifestyle? If not, there’s still time to make up for any gaps. Asking yourself the retirement planning questions below can help you begin to clarify your goals and develop a robust financial plan for your retirement as you approach this new chapter in your life.

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Have You Considered How You’ll Spend Your Time in Retirement?

This is one of the foundational retirement planning questions you’ll need to ask yourself because your retirement finances can be significantly influenced by the way you intend to spend your time. While you may have already pondered a few ideas, it’s essential to start finalizing your vision for retirement. What kind of lifestyle do you see for yourself? Do you want to spend your summers fishing or take an annual trip abroad? It’s time to brainstorm and explore your options. Although you may not have all the answers yet, you can revisit your ideas over time to fill in any gaps.

If you’d like to feel more retirement-ready, ask yourself these four questions related to planning your days:

1.  Will you work in retirement?

This may read like a trick question if you envision a retirement completely free from work. However, it’s worth noting that retirement doesn’t necessarily mark a clear distinction between working and not working for everyone. Perhaps you enjoy the sense of purpose and social interaction that accompanies work, and you’re considering transitioning into retirement by working part-time. In such cases, it’s crucial to evaluate how long this income source is likely to last.

2. How do you plan to spend your days in retirement?

Whether or not you plan to spend time working, retirement presents an opportunity to indulge in your passions and engage in activities such as volunteering. However, it’s important to envision what a typical day in retirement might look like for you. Activities such as travel and hobbies can be costly, and it’s essential to plan for sufficient income to support the lifestyle you desire. Moreover, due to inflation, basic living expenses are likely to become more expensive over time, and it’s necessary to factor this into your retirement planning.

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3. Where will you live when you retire?

Your choice of residence in retirement can impact your income as well as your emotional, social, and physical well-being. Whether you decide to stay put, move closer to family, or downsize, it’s helpful to use your 40s and 50s to research how income taxes in your preferred location could affect you. Additionally, it’s important to consider how your living situation may need to evolve as you age. For instance, you may need to opt for a single-level home to accommodate your changing physical health needs.

4. Will anyone rely on you for financial support?

Another of the most important retirement planning questions to ask yourself is about the potential financial reliance of your adult children or grandchildren as you plan for retirement. Additionally, if you’re currently caring for an elderly parent or could potentially do so in the future, this could have a significant impact on your financial situation. It’s essential to assess the costs involved in providing such support in terms of both time and money and incorporate them into your retirement plan.

What Will Your Retirement Income Look Like?

After you’ve thoroughly considered your retirement lifestyle, it’s time to ask yourself retirement planning questions related to your income needs – and sources. Generally, Social Security benefits should not account for more than half of your future income in retirement, which means that your retirement plan, savings, and/or pension should provide the rest. So, ask yourself:

• Do you know your retirement account balance(s)?
• What is your latest Social Security estimate?
• Are you factoring in an inflation rate of at least three percent annually when you think about your retirement income needs?

Answering these retirement planning questions will help you evaluate whether you have sufficient income to support your desired retirement lifestyle. If you don’t, you can make changes in your 40s and 50s to save more or reevaluate your future lifestyle.

What Else Can You Do to Prepare for Retirement in Your 40s and 50s?

If you haven’t yet met with a financial advisor, now is an ideal time. You may be at or near your peak earning years, by which time it’s helpful to have your retirement plan in place. Keep in mind that cookie-cutter or one-size-fits-all plans may not truly accommodate your needs. A financial advisor can help you create a retirement plan that suits your unique needs and goals.

At Wade, we learn your goals, apply our guidance, and work in partnership with you to answer your retirement planning questions and develop a long-term strategy to help you achieve the retirement lifestyle you desire. If you’d like to schedule a conversation, please reach out to us today.