You’ve probably thought about retirement quite a bit over the years. Maybe you think about enjoying time with family and friends, going back to school, starting a business, traveling, or volunteering. But, have you been prioritizing those goals and thinking through the details of how you’ll make them happen?
About five years before you hope to retire, if not before, ask yourself these five questions to make sure you’ll be ready to retire the way you want.
- What are your expectations? You and your spouse or partner will want to consider:
- Where you plan to live. If you plan to move, how will that impact your cost of living, access to health care, and—if you move to another state—your tax obligations? If you plan to stay put, how does your home equity factor into your plans?
- What you want to do. The early stages of retirement can be costly. Many people overestimate how much they’ll earn and underestimate how much they’ll spend. Take a hard look at both fronts.
- How you’ll pay for health care. After food, health care is likely to be your second largest expense in retirement. According to Fidelity, a 65-year-old couple retiring in 2024 is estimated to need $330,000 to cover medical expenses throughout retirement.1 Although Medicare kicks in at age 65, you may need to buy supplemental insurance or, at the very least, budget for the expense. The same is true of long-term care.
- Will you have enough? With five years to go, it’s time to run some real numbers. If they aren’t encouraging, you may need to rethink your plans, step up your savings or both. If you'll be age 50 or older in 2026, you may contribute an additional $8,000 to the Hewlett Packard Enterprise 401(k) Plan and an additional $1,000 to an IRA.
- Are you invested properly? As you round the bend toward retirement, you may not want to take on any more investment risk than necessary. But the consequences of being too conservative can be just as worrisome when you account for inflation and the possibility that you could outlive your savings. What could help is having an appropriate asset allocation—your ideal investment mix will depend on a number of factors, including your age, the size of your portfolio, and your risk tolerance.
Remember, the Hewlett Packard Enterprise 401(k) Plan investment fund lineup makes it easy for you to create a diversified investment portfolio that’s right for you. Plus, My HPE Financial Wellness connects you to a number of tools that can help you invest for retirement and evaluate and rebalance your portfolio.
Where will your retirement “paycheck” come from? At the same time you think about shoring up your nest egg, begin thinking about how you'll convert some of your savings into income. It may be helpful to group potential sources of income into categories, such as:
- Income from a part-time job,
- Current investment income,
- Pension income, such as a defined benefit plan or Social Security,
- Annuity income, and
- Income from any other assets, such as rental real estate.
Next, determine when and how you'll begin using this money. If you plan to work a bit during retirement, that may provide your “first” income, but be conservative: you might not work as long as you expect. Then, account for any pension income and Social Security. Before you rush out to file for your Social Security benefits, however, consider the big picture: generally, the longer you wait, the higher the benefits.
- How does your home factor into your retirement? Don’t neglect what is likely one of your largest assets: your home. If you plan to downsize or relocate, start planning your move. With home prices rising, you may want to begin searching sooner rather than later. If you want to wait for the housing market to improve before you sell your current home, you can take steps to get your house ready for when the time is right.
If you plan to stay put, consider whether it makes sense to pay down your mortgage faster: You’ll save money on interest payments and improve your cash flow in retirement.
Ask early, ask often
By thinking through questions about your investment portfolio, your home, and your retirement lifestyle early and on a regular basis, you’ll have more time to adjust your savings strategy over the years leading up to your retirement.
Keep in mind you don’t have to have all the answers right away. The point is to start asking these questions when retirement is close enough to know what you want, but far enough for you to polish your strategy to meet your goals or adjust your plans.
1The Retiree Health Care Cost Estimate is based on a single person retiring in 2024, 65-years-old, with life expectancies that align with Society of Actuaries' RP-2014 Healthy Annuitant rates projected with Mortality Improvements Scale MP-2021 as of 2022. Actual assets needed may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The Fidelity Retiree Health Care Cost Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program, original Medicare. This calculation takes into account Medicare Part B base premiums and cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by original Medicare. This estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term
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Be prepared for what comes next
From healthcare costs to retirement income, asking the right questions now can help strengthen your retirement plan.
