Getting ready for retirement involves more than just calculating how much you will need and the rate you can draw down your savings.

The years before you retire are a crucial time to prepare both financially and psychologically.

Often – and unfortunately – many retirees underestimate their expenses, get bored without a daily grind and panic over market corrections.

Especially when the media is shouting about bank failures, historically high inflation numbers, a ballooning national debt, a hawkish Federal Reserve and countless predictions of a looming recession.

Here are a few exercises that you can take to get ready for the reality of retirement.

Know Your Retirement Expenses

Test the retirement expense waters. Generally speaking, when financial advisors hear stories about people who run out of money in retirement, it has little to do with market actions or portfolio losses.

Most retirees often underestimate expenses both during the planning process and in retirement. People just seem hardwired to believe that they spend less than they actually do.

A good recommendation for you is to test your estimate out and actually live your retirement spending plan before you retire. 

While you are working, it is possible to fudge this a bit, and many people do. But under-estimating income needs may become a big problem when you try to maintain reasonable withdrawal ratios in retirement that may enable your future income to grow, adjusting for inflation.

If you plan ahead and take the time to make sure you can actually live on your assumed expense amount, you might avoid a lot of problems.

If it turns out that you have a hard time living within your planned spending allowance, then you need to take action before you retire or work a few years longer.

Have a Plan

Retire to something, don’t just leave work. The concept of retirement is going through some massive changes. Gone are the days when dad retires, sits on the porch for three years and then dies either of boredom or a heart attack.

People are retiring later, moving to a different job such as a nonprofit or consulting in their field of expertise or starting a small business. Some of this may be out of necessity, but perhaps more of it is out of the joy that people find in contributing their knowledge to society. Just because you don’t have to go to a workplace, it doesn’t mean you can’t do something productive and enjoyable.

A good suggestion is that you retire to something rather than just retire from your work. One can enjoy a hobby like golf or reading, but you need more than that to fill the day.

This information should not be construed by any client or prospective client as the rendering of personalized investment advice. For more information, visit BushWealth.com for our full disclosures.