How to Take the First Steps into Retirement

senior couple on beach
Roger Wright/Getty ImagesRetirement is the beginning of a new phase of life.
By Dave Bernard

Saving for retirement typically requires a lot of hard work and sacrifices. And leaving a job often means saying goodbye to co-workers who have become friends. But like every other transitional period, it is also the start of something new.

It is best to launch your retirement on a positive note. It makes sense to have a clear idea of what you will be doing on the first day of retirement. Retirement holds the promise of redirecting the rest of your life toward pursuits that stimulate your heart and mind. But setting up a fulfilling and engaging retirement often takes some effort. Before I take my first steps into my second act, I am considering the following questions:

Will I want to work part time? I know that I do not want to work full time during retirement, but part-time work deserves some consideration. Many retirees miss their interactions with co-workers. After spending eight hours a day with a group of people for years, strong bonds are often established. Finding yourself suddenly without these social connections can be a shock for the newly retired. I am open to part-time employment as long as it involves doing something I like or feel is worthwhile. A part-time job would get me out of the house for about four hours a day where I can engage with others, keep my mind sharp and bring in a little additional cash. On the other hand, life with no work also sounds quite attractive. I don't have a definite answer to this question yet.

Can we retire in place? My wife and I have picked the spot where we want to retire. It's a small community with lots of sunshine near a cozy downtown and a short drive to the coast. I would like to live here for a long time, but sometimes wonder if we will be able to stay here as long as we want. Baring some economic crash, we should be OK financially. We chose a one story home to avoid having to climb stairs. The community has a good support network for older folks including activities and public transportation. And there is always something going on within a walk or short drive. It's a good idea to make sure your current home and community will continue to meet your needs as you age, and to have contingency plans in case your health declines.

What can I do to feel productive? I love the idea of relaxing and doing nothing. However, I also enjoy the feeling of accomplishment you get from doing something worthwhile. When I was working full time, my need to be productive was satisfied on a regular basis. But once retired, what will I do to find that same satisfaction? I plan to pursue a few avenues that help fulfill this need, including blogging, learning to speak (or at least better understand) French, taking a number of online courses and dedicating time every day to exercise and health maintenance. But will that be enough for the next 20 or more years? I plan to investigate volunteering, and we are considering living abroad for some period of time. Maybe I will take up painting or some other artistic expression.

What are my top 10 to-dos? If I want to get something done, I put it on a list. Before I retire, my goal is to have a list of the top 10 things I want to do now that I have the time. My hope is the exercise of generating the list will help me better identify what I really enjoy and how I can best spend my time. The beauty is I have the flexibility to add, delete or modify this list at any time. My list is a work in progress, but I do have a few options jotted down, including living in France for a month or two, writing a fiction novel, cultivating an awesome home garden where we walk outside to pick fresh tomatoes, apples and lemons and discovering the secrets of what entertains my grandchildren most. I have no grandchildren yet, but it sure is fun to imagine.

My wife and I want to take the right first steps when we begin our retirement journey together. We are trying to identify and cover all our bases ahead of time. For us, the key is to sustain an ongoing curiosity and willingness to explore new things. We hope our list can provide an overview while our imaginations fill in the blanks.

Dave Bernard blogs at Retirement-Only The Beginning.

10 Ways to Reduce the Cost of Retirement
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How to Take the First Steps into Retirement
Eliminating your mortgage is one of the best ways to make retirement more affordable because it removes a sizable monthly bill. While you'll still have to pay taxes and maintenance costs for your home, those expenses are likely to be a fraction of your mortgage payments.
Once your children are independent, you will likely no longer need a several-bedroom house in a good school district with a large yard that can be expensive to maintain. Consider downsizing to a smaller home in a less-expensive neighborhood, and add the proceeds of the sale to your nest egg.
Where you live plays a big role in how much you pay for food, taxes and a variety of other services. Moving to an area where the cost of living is significantly less could allow you to spend down your retirement savings more slowly.
If you and your spouse commuted to separate places each day, it is likely that you each needed a car. In retirement, you might be able to get by with one car, thus eliminating the insurance, gas and maintenance costs of the second vehicle. In walkable communities with good public transportation, you may even be able to get by without a car in retirement.
In retirement, income tax will be due on withdrawals from traditional 401(k) and individual retirement accounts, but you can space out your withdrawals to avoid a hefty tax bill in a single year. Prepaying income tax on some of your retirement savings using a Roth IRA or Roth 401(k) allows you to avoid a big tax bill in retirement.
Investing in high-cost funds reduces your return. Minimizing investment costs is especially important for retirees who are living off income from their portfolio. In this case, selecting the lowest-cost funds that meet your investment needs translates to more money in your pocket.
There are significant penalties if you withdraw money from your retirement account too soon or too late. There is also a reduction in benefits if you sign up for Social Security early, and a late enrollment penalty if you delay signing up for Medicare Parts B and D. Pay attention to important retirement deadlines to avoid paying more than you need to.
Health care is likely to be one of the biggest and least predictable costs you will face in retirement. But there are some things you can do to control your health costs. Consider purchasing a supplemental policy to Medicare to fill in some of the gaps and cost-sharing requirements traditional Medicare doesn't cover. Also, shop for a new Medicare Part D plan every year to make sure you are getting coverage for your medications at the best price.
Retirees have the luxury of being able to travel whenever they want. Traveling is often less expensive if you avoid major holidays and school breaks, and most tourist destinations will also be less crowded.
One of the major perks of growing older is getting discounts at movies, museums and restaurants. While some senior discounts are well-publicized and open to everyone old enough to have an AARP card, others are available only to those who ask. A little research can add up to big savings if you’re willing to admit your age.
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