During the First 60 Days of Retirement: What You Need to Do and What You Need to Know
You've worked hard for many years, and now finally, you're ready to retire. Hopefully you have already analyzed your investments and spending habits to ensure you have enough money set aside to responsibly take this step. That analysis is one of the most important aspects of preparing for retirement.
However, the planning and thinking don't stop on your first day outside of the office. The actions you take during your first 60 days of retirement are also important and will set the tone for your next 20 or 30 years. To that end, here are five things you should do during your first two months of retirement.
Figure Out Your Monthly Costs
Now that you're not going to work each morning, your monthly costs may change somewhat. There are some costs you may no longer have — such as a parking pass, lunches with coworkers, and expensive wardrobe upgrades. There are other expenses that may get added to your roster — such as a membership at the local tennis club you finally have time to join, or mid-week dinners with your children.
Sit down and make a realistic new budget for yourself in retirement. Revisit this budget 30 and 60 days post-retirement so you can make adjustments as your habits become more clear. Knowing how much you spend each month will help you determine how much you need to draw.
Create a Withdrawal Plan
The standard recommendation has long been to withdraw no more than 4% to 5% of your savings in the first year of retirement. This is a pretty reasonable starting point for most people. However, if your costs are so high that a 4% withdrawal rate won't cover them, you need to consider other options. You could increase your withdrawal rate to 5%, which is not a bad idea if you have some high-earning investments and substantial savings. You could also work to reduce your spending, or look for a part-time job to earn a little extra income in retirement. In any event, you need to have a plan of how much you're going to withdraw and how long your money will last as a result.
Start Thinking About Long-Term Goals
To keep yourself motivated in retirement, it's time to set some goals. These could be personal goals, such as pursuing a hobby you never had time to pursue before, or they could be career goals; maybe you want to have a second career as a guitar instructor or running coach. Switching from work mode to fully retired mode can be a struggle, mentally, and setting some goals will help bridge the gap as you make this transition.
Make Changes to Healthcare Plans
Contact your health insurance company to see what changes need to be made to your policy. Often, you have 60 days post-retirement to make these changes. You may be able to open a healthcare savings account (HSA) or switch to a plan with lower co-pays. The sooner you learn about your options, the better. If you do not make changes now, you may have to wait until the first of the year to do so.
Take Time to De-Stress
Finally, make sure you take time for yourself to relax and de-stress. You've worked hard, and you were ready to retire. Spend time catching up with friends, taking walks around the neighborhood, or just sleeping in. You've earned it.
Once you've made sure you're ready to retire, it's time to take that first step. Then, follow up by spending your first 60 days focused on the goals above. You'll be in a great position to enjoy the following decades of your life.
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