Retirement Exit Strategy: 4 Tips to Make Retirement Work for You

Are you considering a retirement exit strategy but don’t know where to turn? Do you need some ideas to help make retirement work for you and have come up empty?

Well, you’ve come to the right place. 

You’ve already done the hard part. Long gone are the days of late nights at the office and taking on extra work to get noticed- sacrificing time away from family to provide for them.

That life is behind you, and a new one awaits. 

One where you welcome the sound of laughter, the feel of warm sand between your toes, and much-needed rest. 

But where do you start? After so many years of working, how do you stop? When? And how do you begin to plan for the rest of your life?

While it may seem like a lot, we have four tips to get you started and a fantastic resource that can take you the rest of the way. 

Retirement Exit Strategy Tip #1- Choose Your Time Wisely

Timing matters in everything in life; preparing for retirement is no exception. When deciding when to retire, here are three things to consider:

• Are you more or less debt-free?
• Does your company match contributions to your retirement or provide for profit-sharing, and when does this occur?
• When does your sick leave and PTO expire?

Being debt-free is an essential factor in deciding the timing of your retirement. Because your income will be significantly reduced, the chances of debt causing you strain in retirement are high. Consider delaying retirement until you eliminate a large portion of the debt, or speak to a financial advisor about settling them with those assets at your disposal. 

If your company matches contributions to retirement savings, scheduling your exit strategy to coincide after your company has matched your contributions allows you to take advantage of this perk one last time before departing. The same applies to retiring before your sick leave expires and taking all that unused time straight to the bank. 

If you find the sweet spot between these dates, you may leave your job with a bit of extra change in your pocket, and who doesn’t want that?!

Retirement Exit Strategy Tip #2- Consider Your Financial Situation

Once you stop working, you will have much less income coming in, which may make retirement a bit uncomfortable if you still need to get your finances in order and have accrued debt.

According to USAFacts, almost half of American households have no retirement accounts, so if you haven’t saved up, you are not alone. That doesn’t mean retirement is out of reach; it just means that it may look different than what you thought. Here are some things to consider to get your finances in order. 

• Make sure you transfer any retirement savings or 401Ks from work into IRAs. Cashing them out will result in a penalty. 
• If you have other retirement savings accounts, like Roth IRAs or Traditional IRAs, it’s time to call your financial advisor. Depending on your age, the IRS has calculated a monthly amount you should receive upon retirement- your financial advisor can tell you the amount and help you complete the appropriate paperwork to get those payments started. Knowing this amount can help you build a more realistic budget. 
• Social security benefits are an essential income stream, but depending on which benefit options you decide to have, it may cap your savings funds. Because many retirees need a part-time job to supplement their income, looking at your social security benefit options is crucial. 
• 28-36% of your income should go to housing costs- with inflation, that’s probably higher. Consider paying off your house or selling and downsizing so your housing costs match your new income. 

Being retired means you become acutely aware of your finances; not only are you restricted by your social security benefits, but also by the amount you have been able to save over the years. Regardless of your savings, retirement means being wise with your money so it lasts as long as you do, which we all hope is a long time. 

Retirement Exit Strategy Tip #3- Explore Healthcare Options

Healthcare is a beast many people avoid. According to the 2021 Census, 28.3 million people still needed health insurance by the end of 2020. 

But if you are ill or have comorbidities, this is not an option for you. Medicare is available for those who retire at 65, but if you plan to retire early, you must find alternative healthcare coverage. 

While the Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to keep your employer-provided health benefits if you retire before age 65, some employers may not offer this as an option. If they do, keeping that insurance comes at the total premium price. 

And because that can get expensive, you want to explore options that fit your new budget. You want adequate coverage for your and your family’s needs as you get on in years. 

Retirement Exit Strategy Tip #4- Plan Your Future

Now comes the fun part. What will you do with your new life?

Retirement is just the door into a new adventure, like having all the fun of your twenties with much more wisdom. 

You can now revisit old passions and re-discover new hobbies. You can give back to the community by mentoring the next generation or pouring yourself into philanthropy.

Perhaps the most exciting part of retirement is not retiring but pursuing a career you always wanted or creating something new by becoming an entrepreneur. 

Remember the first three tips we have given you, and within reason, explore the options in front of you. You have so much yet to offer; the question becomes, what do you want to do first?

Find the Right Partner

If only we could answer all your retirement exit strategy questions with four tips, you probably have a few hundred questions unanswered!

This is why finding the right partner to guide you along the way is important. Family, friends, and financial advisors are essential to helping you plan out the next steps. They can give you a perspective and be the voice of reason when you need it most.

We have a fantastic partner in AARP who have many resources available for you, so check out their services and library of articles created just for you. 

No matter what you decide to do with this new phase of life, be bold! Love loud, give back, or start something new. 

Be mindful of your finances and keep that ticker healthy; there’s a lot of living left to do.

So get to it!