Published On
February 20, 2015

Retiring can seem like a big step, especially since there is no preparation for it – or is there? What if you could get some practice in before finally retiring? Keep reading to learn why you should rehearse for retirement and how to do so.

“Act the Part” by pretending to be retired. This could involve not only your budget but your expectations regarding your experiences in retirement.

Make a Budget and Test It. The financial aspects are the greatest concern for many as they approach retirement. Will I spend less because some of my expenses are lower? Will I spend more because every day is Saturday? These are some of the concerns that those anticipating retirement face when attempting to imagine their financial situation during retirement.

As is the case during one’s working life, a budget can be a huge benefit in preparing for yourself for retirement. You’ll want to make a list of all of your expenses initially, taking into account any that may change during retirement. Perhaps you will be on Medicare instead of a private health plan. Maybe you plan to downsize your residence. These changes should be taken into account, as should any expected increases such as more frequent travel or discretionary spending. (Again, every day is Saturday!)

Next, you’ll want to estimate your projected income from all sources. Do you have a pension plan at work? Social Security? Retirement accounts such as IRAs that you can use to produce income in retirement? Keep in mind that many of your figures will be an estimate. For example, will you be able to comfortably withdraw 4% from your IRA annually or is a different number more realistic? Is the estimate provided when I sign in at to review Social Security benefits likely to prove a close approximation of my actual benefit, or are my upcoming years of earnings likely to vary enough that the estimate may need to be altered?

A financial planner may be able to assist you with some of the finer points as you approach retirement, but if you have to make an estimate in general, it’s a good idea to err on the side of caution and round your income down. This will give you some room if your projections are less favorable than expected.

Once you’ve come to an estimate regarding income, try living off that amount for a month or two. What does it feel like? Are you meeting your expenses but struggling to do so? You may wish to reconsider your retirement plan. On the other hand, if your new budget feels comfortable, you may be more prepared than you thought, at least financially. Now you can focus on the more important question of what you’d actually like to do with your time in retirement!

Check Your Preferences. Many people retire only to find themselves returning to work almost immediately. Others become dissatisfied with the amount of free time to fill absent any specific tasks to fill it. Your retirement is your own, with a variety of choices. While many do prefer the view of retirement as an extended vacation or “series of Saturdays,” this is by no means your only option.

Some prefer to engage in volunteer work, take classes, take additional responsibility with grandchildren or otherwise increase family involvement, engage in leadership roles in their faith-based institutions, travel, focus on fitness or make a combination of these and other possibilities. The options are so limitless they can seem a bit overwhelming. Giving your plan a “test run” can help you determine if you’ll enjoy the lifestyle you imagine or want to go back to the drawing board for some revisions.

No Need to Wait. You don’t have to rehearse at the last moment before retirement. Giving a retirement seminar a test run five or even ten years before will not only give you the opportunity to mentally adjust to the concept, setting expectations and preferences, but also leave you with enough time to alter your plan if necessary.

Retirement Readiness Guide

Are There Other Factors to Consider? There are a few other situations you will want to address before retirement.

Although your income might look good from your projected sources, do you have a reasonable emergency fund? This can be an important financial safety net before and during retirement. Your retirement accounts you use to receive your monthly income should not necessarily be the source of your emergency savings.  A lump sum equal to a few months of living expenses in cash is a good option. You won’t be making money off of the account, but you’ll have immediate access in case of an emergency and also reduce the risk of needing to sell investments at less than desirable times or pay transaction costs to do so.

Make sure you understand how Medicare works before enrollment. Some of the decisions you make upon initially enrollment such as the choice to enroll in Parts B and D or to purchase a Supplement or not can have long-lasting effects. You may be subjected to underwriting instead of guaranteed issue, for example, if purchasing your supplement outside the three months on either side of turning 65. Opting out of B and D initially can lead to penalties when choosing to sign up later on. Make sure you have a game plan for Medicare prior to enrollment. It’s a good idea to start your research six months or more before turning 65.

Planning a Retirement Run Through before actually entering retirement can give you valuable insight into your finances and preferences. This can hopefully lead to a smooth transition and increase your overall enjoyment and peace of mind in retirement.


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