How to Retire: 5 Steps to a Secure Future

Senior couple making retirement plans with adviser
Alexander Raths /

This story originally appeared on NewRetirement.

You want to know how to retire. Figuring out the answer to this question can feel overwhelming and sometimes impossible, especially if you are already in your 50s or 60s.

Maybe it has been hard just making ends meet month after month, and now you are faced with creating a plan for the next 20 or 30 years of your life.

There are many unknowns and, perhaps, not quite enough savings.

However, you can do it.

Following is a straightforward plan for how to retire no matter how much you have saved.

1. Figure out what you want to do in retirement

Retired man
Chaay_Tee /

The people who are happiest in retirement are those who have a purpose for this phase of their lives.

It is best to retire to do something, not just to escape whatever you’ve been doing to earn money.

Maybe think about your retirement in five-year segments. Consider what you want to be doing and what will be important to you in each segment.

2. Write down a retirement plan

Retired couple with money
szefei /

A lot of potential retirees have a “retirement block.” Similar to a writer with writer’s block, many potential retirees just don’t know how to get started planning their future.

The cure for retirement block is the same as writer’s block. Just jot some things down. Want to know how to retire? Start somewhere.

And know that you are probably not going to get a final plan the first time around. In fact, you might feel shocked by how bad your future finances appear.

But don’t worry: There are lots of ways to fix a retirement plan.

Retirement calculators make it easy to get started. Just answer the questions in the calculator.

Don’t be afraid if you put in the wrong information. Whatever you write down the first time is not going to be your ultimate retirement plan. You will probably need to make some major adjustments.

However, be sure to use a reputable and detailed retirement calculator.

Some calculators make a lot of assumptions that may or may not be relevant to you. And many of these tools focus only on how much savings you need for a secure retirement.

Look for a tool that addresses the following factors:

  • Asks about you and your spouse separately.
  • Gets into the details about your debt.
  • Lets you enter information about each individual savings account.
  • Allows you to put in different levels of saving, spending and earning — none of these are going to stay the same throughout retirement.
  • Helps you think through medical and long-term care costs.
  • Allows you to model different scenarios for your savings, housing, spending levels and more.
  • Enables you to save your information so that you can update it later as you make decisions and strengthen your plan.

3. Play with your retirement plan and fix the problems

Older couple planning for retirement
Image Point Fr /

Once you have a baseline plan in place, you will begin to see how to start fixing what might be wrong with your plan.

Don’t worry if you don’t have enough savings. Here are just a few of the many other options you have for improving your retirement finances:

Delay your start of Social Security

Starting Social Security benefits at your full retirement age (instead of at 62, the earliest age to start) can sometimes mean more than $100,000 over your lifetime. Delaying longer could mean even more.

Boost your investment plan

Depending on your level of savings, getting a better rate of return, reducing investment fees and improving your tax efficiency can be great ways to ensure a more secure retirement.

Invest in a lifetime annuity

Having adequate income for life is the biggest problem facing most retirees. A lifetime annuity is one way to give yourself the income you need — guaranteed for your (and your spouse’s) life.

Buying an annuity locks up your savings, but can greatly reduce stress. However, there are many pros and cons to lifetime annuities.

Work longer

There are so many benefits to working longer, including social, emotional, intellectual and financial benefits. And it does not have to be nose to the grindstone forever.

There are lots of ways to make work a bigger part of your retirement plan: an extra year at your job, a part-time gig, a sabbatical instead of retirement or starting your own side business. Try out different work scenarios in your retirement plan.

Tap home equity

If you are like most households, your house is your most valuable asset, often exceeding your retirement savings. If you own your home, you can give a serious boost to your retirement plans by downsizing or getting a reverse mortgage.

Get creative

Desperate times call for creative measures. If you are nearing retirement and are short on adequate funding, you may need to start thinking outside of the box.

Getting a roommate, retiring abroad and finding passive income streams are a few ways to get creative to fix your retirement plan problems.

Spend less

Anyone can retire, regardless of their level of income and savings: It is a matter of spending less and making do.

It’s not easy, but some people manage to make retirement work on Social Security alone.

Either by using a retirement calculator or by working with a financial adviser, you should keep playing with your retirement plan. Change the numbers and dates until you have a plan you can live with.

4. Set a retirement date and tell everyone

A retired couple celebrates their freedom at the beach
goodluz /

You have documented what you have, plus researched and refined your options. Now it is time to finalize some decisions and commit to your plan. Sharing your ideas for how you will retire will help make it real for you.

Of the many important dates, you will probably want to set an official retirement date for yourself.

Even if you will be easing out of work or getting a retirement job, don’t be shy about celebrating this important milestone in your life. Retirement is a major accomplishment.

Retirement date aside, you will want to take note of all of the important events in your plan: the start of Social Security, when your mortgage is paid off, when it’s time to downsize, when it’s time to start withdrawals from savings, etc.

Be prepared to adjust them as necessary as you progress through retirement.

5. Take the leap of faith

Retired couple
wavebreakmedia /

Research shows that people feel a lot of stress and anxiety in the years leading up to retirement. However, they feel better in retirement.

The retirees who went through a rigorous planning process and figured out how to retire expressed the most satisfaction with retirement. However, even those not as prepared found ways to make it work and enjoy this time of their lives.

So, as the saying goes: Jump right in, the water’s fine.

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