Retirement is an exciting yet daunting time. After decades of living off of a paycheck and having built-in structure to your weekday, it can be a major adjustment.
Since we all want to be prepared to make this transition as enjoyable as possible, here are 3 things that will make retirement a whole lot easier.
1. Paying Off Your Mortgage
Not having a mortgage in retirement serves an emotional purpose as well as a financial one. Frankly, it just feels good to be free of such a large debt that has hung over us for decades. This feeling alone can make retirement that much more enjoyable.
Having no mortgage in retirement takes a lot of pressure off of your finances as well. Let’s do a quick example to see how this works.
Example
Let’s say you had an annual salary of 100k around retirement time and you had been contributing 20k into the TSP every year. Let’s also say that after taxes and payroll deductions, that left you with 65k to pay for your living.
$18k of that had to go towards your $1,500/month mortgage payment which then left you with $47k for everything else.
If you are able to pay off your mortgage by retirement time, you don’t need $65k of after-tax income to maintain your standard of living, but instead only $47k! This can make a huge difference in the type of retirement lifestyle you can comfortably afford.
However, I do want to mention that it is not always a deal breaker if you aren’t able to get rid of the mortgage before retirement. Many people are able to comfortably retire even with a mortgage. However, not having a mortgage typically makes it a lot easier.
2. Save A Lot
This one should sound obvious but I have to mention it. Having a solid nest egg is a great way to take some stress off in retirement.
Your fixed income (pension, Social Security, etc.) is incredibly powerful in providing you with lifelong income but it often lacks flexibility. As surprise expenses come up throughout retirement, it is important to have access to funds that you have much more control over.
3. Now What?
The happiest retirees have a pretty good idea of what they want to do in retirement. This could be hobbies, volunteering, starting a business, or anything else. The type of activity is less important as the fact that you have things that you are passionate about and enjoy doing.
The retirees that are more unhappy and tend to struggle are those that don’t have activities or interests that keep them engaged and fulfilled in retirement.
