Planning for retirement is like getting ready for a long road trip. You meticulously plan out the routes you’ll take, the cash you’ll need for your adventures, and, if you’re truly prepared, you’ll make sure to add extra time and resources for unexpected bumps along the way.

As you begin thinking about the retirement road ahead, your mind may be buzzing with questions: Do I have enough saved? How much is enough, exactly? And how will I afford the big expenses in retirement? As you ponder these questions, allow us here at Retirement Genius to provide some encouragement and enlightenment. Let’s explore some of the most common and pressing questions to ask when retiring so you can plan the adventure of your life. Let’s go.

The 7 Questions to Ask When Retiring

While you likely have dozens of questions about retiring, let’s start answering the most pressing ones surrounding finances and healthcare.

1. How Much Do I Need to Have Saved for Retirement?

How much you’ll need for retirement depends on many factors: what living expenses will you have later in life? What health costs will you need in the future? Do you own your home? What financial obligations — like utilities, property taxes, transportation, and insurance — will you have as you age?

Since retirement is not a one-size-fits-all journey, it’s difficult to provide a recommendation on how much you should save for retirement. However, to give you a ballpark figure, experts generally recommend having 7 to 13 times your salary saved by the time you turn 65. This percentage works best under the assumption that you’ll only draw 4% throughout a 30-year retirement.

As you begin calculating how much you may need for retirement, remember that these figures are meant to serve as a recommendation, not a rule. You may need more or less for your particular circumstances. If you don’t already have an estimate of retirement expenses, you may want to work with your financial planner to create a realistic and personalized retirement plan. Factor in the following common retirement expenses when putting together your estimated retirement costs:

  • Housing costs
  • Utilities
  • Healthcare expenses
  • Insurance
  • Taxes
  • Food and groceries
  • Transportation
  • Travel and leisure
  • Debt payments
  • Home care and assistance
  • Personal care
  • Funeral and end-of-life expenses
  • Emergency fund
  • Inflation

2. How Do I Avoid Running Out of Money After Retiring?

One of the most common fears retirees have is running out of money during retirement. It makes sense that retirees are concerned about depleting their life savings. Inflation, rising healthcare costs, and expensive long-term care options are sure to make anyone nervous about the nest egg they’ve saved for decades.

To ease your worries, you can put the following strategies to work:

  • Diversify your portfolio. The stock market has its downturns, which is why you want to make sure you have a well-diversified financial portfolio. Work with your financial advisor to create a balanced investment strategy protected against sharp market turns.
  • Delay collecting Social Security. The longer you wait to collect Social Security, the more income you can guarantee later in life. If possible, hold out until age 70 to begin collecting your benefits.
    Withdraw 4% (or less) annually. Stick to the conventional wisdom of withdrawing a small percentage of your savings every year. This can help you avoid running out of cash.
  • Work part-time. Taking a part-time job or working within the gig economy not only earns you extra income but can keep your mind sharp and your body in motion.
  • Refinance large debt. While it’s ideal to have major debts, like mortgages or loan payments, paid off before retiring, sometimes that’s not possible. If the market rate permits, you can refinance large debt to lower interest rates.
  • Stick to a budget. Don’t let your spending habits get out of control in retirement. Take advantage of senior discounts when shopping or eating out. Key in on how much you can spend every month — then stick to it!

3. How Will My Taxes Change When I Retire?

Just like there’s no one-size-fits-all savings target for retirees, there’s no retirement bracket for taxes; each retiree is taxed differently, depending on their retirement income.

There are a few key considerations to keep in mind as you determine how much you’ll be taxed during retirement:

  • Pre-tax retirement accounts will be taxed upon withdrawal. Withdrawals from your 401(k) and Traditional IRA will be taxed as ordinary income. This can push you into a higher tax bracket.
  • After-tax Roth accounts will not incur any taxes when withdrawn. Withdrawals from Roth IRAs and Roth 401(k) are not taxable, since you already paid taxes before putting these dollars into your Roth account.
  • Social Security benefits are (typically) not taxed. Social Security retirement benefits are typically not taxable unless you collect an income of more than $25,000 as an individual or $32,000 as a couple.
  • RMDs can influence your tax bracket. Required Minimum Distributions (RMDs) generally count as ordinary income, which can affect your tax bracket.

Work with a savvy tax advisor and/or financial planner to stay up-to-date on the latest tax changes, understand how your retirement finances will be taxed, and avoid being taxed more than necessary during your golden years.

4. Can My Spouse and I Retire at the Same Time?

Retiring alongside your spouse can be a beautiful goal to work toward. However, before you both leap into retirement, there are a few logistical factors to work through.

The first is your age. If you and your partner are different ages, you may consider staggering your retirement dates to ensure that you both qualify for Social Security, pensions, retirement withdrawals, and more.

Healthcare is another important — and expensive — factor to consider when planning your and your spouse’s retirement. Depending on your health, one or both spouses may need to continue working to maintain health insurance until you qualify for Medicare to cover medical costs.

Finally, you’ll want to consider your financial readiness. If one spouse feels more anxious about the finances, they may want to continue working a few more years before jumping into retirement. This can add money to your retirement savings and delay withdrawing too much from savings for another few years.

As you enter into conversations with your spouse about timing your retirement, keep an open mind and know that flexibility is the key to a successful plan.

5. Do I Need to Be Debt-Free Before Retiring?

While being debt-free is certainly ideal when entering retirement, not everyone can feasibly eliminate their debt before it comes time to retire.

A great place to start is to analyze your debt and determine what, if anything, to do about it before retiring. For example, many folks on the brink of retirement still have their mortgage to pay off. Keeping the mortgage — or even refinancing it — can make sense instead of dipping into your savings to pay it off before you retire. Work with your financial planner to assess and manage your debt before retiring.

6. What Is the Best Way to Replace My Employer’s Health Insurance After I Retire?

There are a few options for health insurance when you retire: COBRA, Medicare (plus Medigap), private health insurance, VA health benefits, or Medicaid. Depending on your eligibility for these programs, you may have to pay for coverage, so it’s important to factor those costs into your retirement budget.

7. How Will I Pay for Large Expenses When I’m Retired?

There are a few financial strategies you can use when paying for large expenses when retired:

1. Rely on retirement savings.
If you feel comfortable with the amount of money you have saved up for retirement, then paying large expenses shouldn’t be a major issue — even after you stop working.

2. Consider selling your life insurance for a payout.
If you no longer want or need your life insurance policy, you could sell it to a licensed life settlement provider for a one-time cash payout. Life settlements can provide a windfall of cash — on average, four times the cash surrender value of a policy. There are typically no restrictions on what you can use the cash for, making it a viable option for retirees needing to pay for a large expense.

3. Use investment income.
Income generated from investments — like dividends from stocks or interest from bonds — can help cover expenses.

4. Dip into your retirement emergency fund.
As you put together your retirement plans, make sure to have an emergency fund established for large ticket items you’ll need after you retire.

5. Consider annuities.
Annuities are financial products that offer a guaranteed income stream for a specific period (often the remainder of a senior’s life). They can serve as a source of income for larger expenses in retirement.

Make Sure You’re Asking the Right Questions About Retirement!

As you meticulously plan for every twist and turn on the road to retirement, it’s increasingly important to ask as many questions as possible before you quit working. Asking the right retirement questions — and getting answers from qualified experts — can help you plan for every swerve and detour during retirement. As always, Retirement Genius is here to answer any questions you may have about retirement. Whether you want to better understand how life settlements work or explore reverse mortgages, we’re here to share retirement wisdom. Finally, remember that as you plan for this exciting chapter of your life, the journey to retirement can be as rewarding as the destination itself. Enjoy dreaming — and planning — the adventure of your life that’s waiting ahead.