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Retirement planning

5 questions to ask yourself during retirement planning

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How prepared do you feel for retirement? Not just financially but logistically too. Sometimes we are so hyperfocused on making sure we have enough saved up—which is critical to a relaxing and secure future—that we forget to think through the bigger picture. We don't consider the fun stuff, like where we want to live and how we want to fill our days.

Incorporating questions like these into retirement planning can help ease thoughts of an uncertain future. You can sketch out a clear vision that works for you—one that's focused on turning you and your family's unique hopes and dreams for your retirement years into something tangible.

Asking yourself these five questions during your retirement planning efforts will help you keep the bigger picture in mind:

1. When do you want to retire?

You have more options for this decision than ever before. While millennials and Gen Zers are  actively planning to retire earlier,  the current trend is actually the opposite. People currently are retiring later than was the norm for previous generations. This is happening for a variety of reasons:

  • People are living longer. When Social Security first started in 1935, the average life expectancy was around 62 years old. Today, it's about 79. While that's great news healthwise, that's an additional 17 years of income the average person's retirement savings must account for.
  • The U.S. is experiencing a culture shift. Previous generations felt a much stronger pull toward retiring outright at age 65. Today, many people are making a slower transition to retirement by choosing to work less as they age rather than stopping entirely. Some are even opting not to "retire" at all. While this can sometimes be for financial reasons, it may simply be a person's desire to keep doing what they love. Entrepreneurs, creative professionals and others are part of a growing number of people who choose to not stop their careers.
  • Some people feel financially unable to retire. Unfortunately, some individuals realize that they don't have the resources to stop working.
  • A new career may seem enticing. Many people today are exploring career shifts and business ventures later in life. The explosion of gig work has created opportunities for retirees to keep working on their own terms. In fact, 55- to 64-year-olds account for about a  quarter of new entrepreneurs.

Ask yourself when you'd like to retire, and consider all your options carefully. Including personal preference, it's important to factor in how your retirement age will affect your Social Security earnings and other retirement payouts. The Social Security Administration uses your retirement age along with your highest 35 years of income to determine the benefits you receive in retirement. So timing can significantly affect your payout.

  • Retiring at your full retirement age (between 66 and 67 years old depending upon your birth year) will mean you receive 100% of your calculated benefits.
  • Retiring early may lead to a reduced benefit—possibly as much as 30%.
  • Delaying your retirement may mean you'll receive incremental credits as a trade-off, possibly up to 124% of your calculated benefit if you were born in 1960 or later, or higher if you were born between 1953 and 1959.

Because everyone's situation is individualized to their values and goals,  talking with a financial advisor  might help you make the best possible decision about your ideal retirement age.

2. How many years are you planning for?

As you think about your desired retirement age, you'll want to consider how many years you'll need to  fund your retirement. Retirees in 1990 had a life expectancy of 75. Today, it's 79. In 2050, when most millennials will either be retired or nearly retired, life expectancy is estimated to range into the low 80s.

But how many years we will have in retirement isn't clear-cut. Personal situations and lifestyle choices—such as exercise, diet, and overall health—can play a major factor in the length of your retirement. Questions like these can help shape your considerations:

  • What's your current health like? Do you have any ongoing health conditions?
  • How long did your grandparents and parents live? What were their care needs in their later years?
  • Is your family predisposed to certain life-shortening illnesses?

These days, people are living longer than ever. But to take advantage of those years, you'll need to make sure you have enough resources to enjoy them. However many years you project—whether you foresee yourself living on retirement funds for one decade or five—it's generally better to overprepare. If you make your calculations using optimistic ideals, you'll be certain to have the resources you need.

3. Where will you live?

For many people, one of the greatest perks of retirement is the freedom to live wherever you want. You can move closer to loved ones, settle someplace new you've always wanted to live, or stay right where you are. Some people may even make an international move for their sunset years.

As you think through  where you want to live during retirement —based on your goals, income and health—ask yourself questions like these:

  • Where are your family, friends, or potential caregivers? Do you enjoy taking road trips or weekend getaways to visit your friends and family? If you do, you'll want to budget for those trips. Or perhaps you'll decide to move closer to them. It's important to  talk about your retirement plans with your loved ones  so they can offer their support in your new chapter of life.
  • How much would a move cost? Depending on how far you go, a move could be expensive. Factor that into your decision as it might eat into your savings more than you imagine. That being said, certain states offer more retiree-friendly property taxes and a lower cost of living overall. So it may balance out in the end.
  • Do you want to maintain your home or live in a retirement community? Wherever you decide to settle, consider including in your budget any potential home modifications you might need for safe living as you age. Alternatively, if you're interested in senior living communities, you should take a look at their costs a few years before you decide to make the move so you can prepare for that monthly expense.

4. What passions will you pursue?

You don't want to ask yourself 10 or 20 years after you've retired if you could've done more. In this way, retirement is the time for you to think big.

Heading into your golden years doesn't mean your productivity is coming to an end. If you plan well for your retirement, it can be the era of your life when you're most able to pursue your passions. Achieving your best retirement life may just be a matter of determining what's significant to you and going for it.

Get creative as you look toward your future. That's the advantage of starting retirement planning early—you have time to prioritize your big dreams and work the financial figures to see if you'll have what you need to pursue them full-force.

5. Can you commit to being flexible?

Long-term planning is critical, but we should write our plans in pencil, not ink. Once you've answered these questions, identifying what you want in your retirement, you can categorize and prioritize your goals. But realize that your dreams and goals may change as you approach retirement. They may even change while you're retired.

The best retirement plan is one that sets you up to achieve your goals but stays flexible, anticipating that your situation will shift over time. To prepare for this, think about your future budget in terms of three broad categories:

  • Your needs. You'll always require things like housing, food, clothing and insurance. Using your current budget as a starting point, think about how these costs might change as you age.
  • Your wants. Retirement is your chance to explore the passions, pastimes and relationships you may not have been able to during your working years. You'll want to budget for that.
  • Your wishes. These are your moonshot dreams, like once-in-a-lifetime trips, advanced degrees, and  major charitable contributions.

If you plan carefully, you'll have resources left over for your wants and wishes once your needs are met.

You're on your way

Your retirement years can be some of the best of your life, when you enjoy time with your family, chase dreams you haven't pursued yet, and leave a legacy for generations to come. Although you're just starting to put together the foundation for your retirement's bigger picture, you're already closer than you think to attaining your retirement goals just by solidifying your ideas.

Ready to create a step-by-step plan to reach your goals? Share your dreams for the future with  our experienced financial advisors.

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Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.

Thrivent financial advisors and professionals have general knowledge of the Social Security tenets. For complete details on your situation, contact the Social Security Administration.
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