As we move through time, seldom do we think about what our life will be like when we no longer earn a paycheck. Huh? What do you mean? If you’ve already retired, you know what I mean. That transition period from working to being retired is a little unsettling and needs to be addressed. Some mental re-engineering and mailbox money can help with that.

Think about it. You go to work for 25- 35 years and get paid regularly for your efforts. Then one day you stop working and there is no paycheck. There is only what you have saved and any other guaranteed sources of income you may have to pay your bills. Suddenly those checks showing up in the mailbox become a little more important. This is what I call mailbox money; things like Social Security benefits, employer sponsored retirement accounts, annuity payments, etc.

It makes sense to take an inventory of what it costs you to live. Do a budget analysis, so you can get a handle on what your costs are and the probability that your pile of money will be around if you are. Knowing what it costs to live and what it costs to have those extras can be a good thing to know; especially before you retire.

There are two categories to deal with, and the first is your “must haves.’  These are items which are essential for you to maintain your core standard of living. This includes eating, sleeping indoors, health insurance, transportation costs, etc.

The second category is the fun stuff in your lifestyle; the reason you worked and saved all those years. Figure things like travel, recreation, and any other non-essential living expenses into the budget as well. Knowing what that will cost you is a worthwhile effort to undertake.

Social Security

Next, you need to evaluate what you have coming in without having to take from your “pile of money.”  So, do you have social security yet? Have you done the work to determine when you will take it? Did you do a comparative analysis to see if you are shortchanging yourself in some manner, or are you maximizing this benefit for which you paid during your working career? These are important questions to think about ahead of time.

Pension

Do you have a pension? Have you considered whether you will cover both your life and the life of your spouse? What is the cost for that? What happens if your spouse passes away before you do? Will you still be paying for that spousal pension benefit if your spouse predeceases you? How much would your spouse lose if you predecease them? At least one of the social security checks goes away. Also, depending on your initial decisions, the pension will either go away, stay the same, or reduced its benefit amount. So, what will it cost your spouse if you predecease them?

Health Care

What about health care costs? If you intend to travel, how will your insurance benefits pay if you were to get sick or injured while out of your network? What about overseas travel and healthcare?

Retirement is important and should be taken seriously. Work with a trained professional who is versed in those aspects of retirement planning and not someone who only manages investments. It truly is a different skillset with a unique focus. Retirement should be a reward. So, get all your pieces lined up and coordinated prior to taking that big leap. Be as well prepared as possible to ensure you have enough mailbox money to live the retirement lifestyle you envision.