Thinking Beyond Money When Deciding to Retire

Yes, your finances are a crucial part of your decision to retire. After all, you really can’t retire until you have enough saved up to support yourself. However, money shouldn’t be the sole reason you decide to retire. There are other aspects of retirement that need to be considered as well when deciding whether to retire. Such topics include what you plan on doing in retirement, whether you are socially prepared for retirement, and whether you have proper health insurance/medical care plans. These topics won’t overtake finances when it comes to being comfortable enough to retire, but they can have a big role in how long your nest egg lasts and how much you enjoy retirement. For example, if you don’t have plans for how you will cover your medical expenses in retirement, you could be putting your nest egg at risk as medical bills can really add up, especially as you age. Those bills could eat into your savings and leave you with a shortage in the future. The social aspect of retirement is also often overlooked. Leaving the social structure of an office environment can be a tough adjustment for retirees, particularly when the office is an important part of their social life. Make no mistake, retirement can be a lonely time without a good social network to enjoy it with. For retirees living far away from family, it can be even more difficult. Therefore, as you contemplate retirement, you should take time to think about more than just the financial aspects of it. Even if you find that you are financially ready for retirement, you may find that you’re not socially ready to do so or that you just don’t want to stop working.

What Is Your Risk Level?

If you are growing your nest egg through investing, then chances are you are familiar with the concept of risk. In investing terms, risk is the probability/likelihood of losses in relation to the expected return on an investment. Risky investments may offer a high upside, but the chances of reaching those potential heights are slimmer than most other investments and there is the strong possibility that you could also lose money on the investment. When it comes to investing, you hear the phrase “appetite for risk” when talking about an investor’s comfort with risk. Usually, younger investors (those in their 20s and early 30s) tend to have a higher appetite for risk as they are best suited to take an early loss and be able to make up for it during their career as their earning capacity grows and they have more time to save. Those nearing retirement tend to take a more cautious approach to investing and have a lower appetite for risk as they do not want to do anything to upset their nest egg or savings with little time to recover. However, people’s appetite for risk may vary from person to person and may be influenced by other factors such as income level or how much they currently have saved. It’s a personal thing and you will most likely find you the level of risk you are comfortable taking on will shift throughout your life as changes and life events occur. Therefore, it is something that you should assess from time to time, just like other aspects of your retirement savings plan. If you need help figuring out your appetite for risk or reassessing your risk level comfort, you should speak with either a certified financial planner or investment professional.