There are at least three distinct personal approaches to retirement planning but each of them requires a commitment that can involve addressing uncomfortable issues and making difficult decisions, according to a report from the MetLife Mature Market Institute.
The report breaks personality types into three categories—those who put off the specific steps of retirement planning, those who are willing to engage in it but who tend to get distracted and those who engage in it although not necessarily in the best way. All three groups, though, need to follow certain strategies to reach a best-case outcome, it says.
For example, the report recommends carving out a time and place for concentrating on the future. "Choose a place where you can talk — the kitchen table, or whatever works for you — and with whom, whether that be your spouse or partner, a savvy friend, or a financial advisor. Take the time to look at your options. This simple act of stopping to focus on the future even when overwhelmed with today’s demands is essential to preparing for both the expected and the unexpected. You can start taking steps today to consider how you will manage day-to-day living expenses in retirement."
Such sessions should involve not only projections of favorable scenarios but unfavorable ones, such as earlier than expected retirement due to health or other reasons, loss of job or disability.
Housing is an important element: "Consider whether your home may need refurbishing or whether you’d like to have a retirement free from mortgage payments. Might you want to modify your home to correspond to anticipated declines in health and mobility? Some older adults prefer to live in a retirement complex. Your housing needs are part of retirement planning, whether you "age in place" or move in later life."
And doing the math should not be a one-time exercise, the report advises, but rather needs to be adjusted for changes in assets—such as investment losses–and income needs.
Further, plans should be made all the way to the end of your life, which involves steps such as estimating your life expectancy, using factors such as your parents’ ages and their health histories as well as your own. It also involves projecting the possibility of a requiring long-term care and a decision regarding what your life would look like if that happened, and whether to take steps such as purchasing long term care insurance.
