The popularity of tidying, organizing and decluttering has created quite a stir with people of all ages who want to live life with peace, satisfaction and joy.
The transformative power of a very deliberate approach to tidying up one’s household can similarly be applied to preparing for retirement. The act of tidying up and decluttering a household leads to clarity around what’s important and makes space for new things. Tidying up your finances can help do just the same, allowing acceptance and preparation for a new, exciting stage in one’s life — retirement.
Retirement can and should be an extraordinarily happy time in our lives, and recent research from MassMutual shows that it is most enjoyed when people strengthen emotional bonds and have a sound financial plan well before they retire. According to the research, the most satisfied retirees are those who took concrete steps to put both their emotional and financial lives in order at least five years before retirement.
To ensure we’re all able to experience joy in retirement, below please find tips on ways to get your financial house in order before embarking on this new life chapter.
1. Have a goal in mind when you start ‘decluttering’
Tidying up finances can seem unenjoyable and tedious, and creating concrete goals to work toward as you get everything in order can make it easier. Maybe it’s continuing your active lifestyle or simply paying off a mortgage. Either way, identifying goals you want to achieve before and during retirement will make the process of ‘decluttering’ much more manageable.
Research shows that retirees worry a great deal about the financial and lifestyle implications of declining health, including the cost of health care and staying active. Where you live in retirement — including what services and activities you have access to — is a huge factor to consider for your level of activity, enjoyment and health. Recent research reveals that 1 in 3 retirees would choose to live elsewhere and 2 in 3 did not do in-depth research to determine where to live in retirement. Don’t make the same mistake. Do the research to help you land in the best possible place that will allow you to best take care of your body, mind, and financial health. (Hint: Sites like agefriendly.com provide candid crowdsourced reviews to help.)
2. Don’t turn a blind eye on your ‘mess’
Retirees report that taking concrete financial steps in advance of retiring made them feel more financially secure and prepared for retirement overall. Understanding Social Security is a big part of this. Half of those over the age of 50 recently failed a basic five-question quiz about Social Security retirement benefits, suggesting that they may leave thousands of dollars on the table when it comes time to file (SSA.gov is a valuable resource to tap). As soon as you have a handle on Social Security, take a look at all of your income streams in retirement, which ones have income tax or filing time consequences, and which ones can continue to grow if you wait to access them later.
Mapping how this plays out over the span of multiple decades is where a financial adviser can be extremely helpful, and in fact, research from MassMutual revealed that retirees who were most satisfied in retirement worked with a financial adviser before retiring.
3. Don’t lose your important documents in the clutter
If you’ve never documented and compiled all of your banking, investment, insurance, retirement, debt, health, medical and other account information in one safe place (including account logins and passwords), now’s the time to do it. While you’re at it, make sure your will and other important financial documents are up-to-date, as well as all of your beneficiary information. And, be sure to tell someone you trust where everything is.
While this may not feel like a joyful task, it can help you clearly see a full financial picture and provide peace of mind to you now and to your loved ones in the future, helping them to avoid the stress and heartache of searching and decluttering your household to find important information.
4. Count on family and friends to spark joy
Many say that retirement is the time to do what you love and to surround yourself with those you love, and our research backs this up. Those who began focusing on their relationships — building stronger connections, reaching out to old friends or making new friends, and pursing new interests — were more likely to enjoy retirement.
Kids and grandkids may arguably spark some of the greatest moments of joy in life, as well as some of the most stressful. The greatest gift that parents can give their children is helping them become financially-literate, independent and generous adults — and practicing the same so neither you nor your kids become dependent on each other in the future.
These tips are just a few things to consider as you prepare for retirement, so as you’re tidying up your household, it’s never too early to think about what needs to be tidied up in your financial life, as well. Here’s to your journey and being prepared for the best chapter that lies ahead.
Mike Fanning has four millennial children and is the head of MassMutual U.S. with Massachusetts Mutual Life Insurance Company (MassMutual).