Phase 2

Phase 2 – Six years before retirement; get serious about our retirement fund. 

We should have estimated how much money we’ll need for retirement when we first started planning. Now it’s time for a reality check: Do we have to make corrections?

Our best estimate lets us assume that we’ll need about as much in retirement as we do now.  If we spend less, we might be able to afford one more trip a year to see the grandchildren.

Phase 3 – by the first year of retirement we must already know how much we’re spending.

When we were working, we probably thought that we’d spend less money right after we retired, right?  Well, we’re wrong!  Based on a study, most retirees spend more each year during the first
five to seven years of retirement than they did when they were working.  That really ruined our plans!

Maybe we can consider tracking our expenses.  We can make sure we include everything because even small expenses add up over time.

Housing, Utilities, Personal, Health Care, Transportation, Recreation are some spending categories that we can include in our retirement calculator because they also add up!

Phase 4 covers the retirement years 2-15, and at this point, we should already make decisions about our mortgage.

We can use part of our retirement savings to pay off our mortgage. But unless we have a sizable saving, that’s probably not a good idea. We might need to make that money last for a long time, and taking a large withdrawal would reduce the amount available to us for later years.

I also found another alternative called the reverse mortgage. A reverse mortgage is a loan against our home that doesn’t have to be repaid until we move, sell or die. We must be at least 62 to qualify. I not sure if my husband Simon would like this idea…

Finally, Phase 5 which covers years 16+ is the time when we plan for the inevitable path of life. 
We should already start reviewing our will, trusts and insurance policies to make sure that what’s left of our estate ends up where we want it to go. If we don’t have a will, the state will decide who will inherit our assets.

We should also prepare for the possibility that we may be incapacitated. A durable power of attorney gives someone we trust the authority to pay bills and make financial decisions on our behalf. A medical power of attorney authorizes someone to make medical decisions on our behalf. We should also have a living will, which will help our attorney carry out our wishes.

And I thought retirement is the time of our life when we stop all our worries and start living the kind
of life we have wanted to lead!  It seems that retirement preparations alone will take more than 25 years of our life, leaving us only about 15 years with which to enjoy!  But then again, 15 years of retirement always beats the alternative, don’t do you think? 

I guess we need to do a lot of thinking…

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