As a new year approaches, you are likely putting plans in place for your future. With the dilemmas we’ve all faced in 2020, you may be second-guessing any plans you’ve tentatively set. Retirement is probably something you’ve been dreaming about for years – and we don’t blame you. Some want to escape to a sunny beach or calming mountain top, while others just want to sip coffee on their porch in the morning and escape the rat race that comes with owning and operating a business. A financial representative can help you navigate the loads of information out there about retirement planning and different approaches you can take.
As a female business owner, you are aware and have already overcome some of the challenges stacked against you. The U.S. Bureau of Labor Statistics reports that women working full-time in 2019 earned about 82% of what men earned, while the National Center for Health Statistics (NCHS) reports that the average life expectancy of a 65-year-old is three years more (86) than a man (83). Further, the Administration on Aging says that more than one-third of women age 65 and older live alone.
Uncertain about what your future might hold, how can you best set the groundwork to retire successfully and remain confident with your retirement plan? Here’s a simple step you can take to see if you are financially ready to retire: Test drive retirement.
Here’s what we mean:
- Identify all your sources of retirement income -- social security, your 401k, savings, and pension.
- Determine your monthly income from those sources.
- Here’s where the “test drive” part comes in. Set that as your new monthly budget and continue to work.
- Direct any income that exceeds your new monthly budget to your 401(k) or other retirement plans to boost that balance during your “test drive.”
To be sure you can handle any peaks in expenses, such as holiday spending and vacations, keep working for six months to a year and see how comfortable you are with your expected retirement income.
If you’re financially comfortable after your “test drive,” that might mean you’re closer than you thought to calling yourself a retiree!