If you're thinking of retiring in 2026, you may already be counting down the days until you're able to hand in a letter of resignation, exchange contact info with your colleagues, and pack up your desk. And the truth is that it's perfectly OK to be excited about the idea of retiring.
But are you really ready? If your plan is to retire in 2026, here are four essential questions to ask yourself first.
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1. Have I calculated my annual spending?
You might have a sense of what your bills look like right now and what they might look like once you retire. But have you officially crunched the numbers?
Unless you truly have a boatload of savings, miscalculating your annual spending needs by even $1,000 or so could throw your finances off course. So instead of guessing at your annual spending, bust out a spreadsheet, list your expenses, and input what each one costs. Don't forget to account for extra costs you might incur in retirement, like traveling or joining a club.
2. Do I know what annual income to expect?
Once again, you may have a general idea of what your retirement income will look like. But it's important to have as specific a number as possible.
To get there, first list your various income sources. Those may include Social Security benefits, an IRA or 401(k) plan, and other investments.
Next, make sure you know what to expect from each income stream. Figure out what monthly Social Security benefit you'll get based on your filing age, and decide on a withdrawal rate for your IRA or 401(k) plan. You can then apply that withdrawal rate to your retirement account balance to see what number that gives you.
For example, let's say you have $1.2 million in your IRA, but you want to take a conservative approach to withdrawals by using a 3.2% rate. That means you're looking at $38,400 a year from your savings, plus whatever your remaining income streams provide. Make sure your actual available income lines up with your actual annual spending once you've run both numbers.
3. What healthcare options will I have?
If you'll be retiring at age 65 or later, you'll most likely be eligible to sign up for Medicare. But if you're retiring at a younger age than that, you'll need a plan to get health coverage.
One option may be to join a spouse's health insurance plan if they're still working. Another option may be to retain your current employer coverage through COBRA if you'll be retiring a little bit shy of 65, but not too long before your 65th birthday.
Otherwise, you may need to buy an insurance plan from the Health Insurance Marketplace. A plan like that, however, may be more expensive than you'd expect it to be, so make sure to price out options ahead of retirement.
4. Do I know how I'll keep busy?
You be eager to stop working so you can free up more hours of your day. But it's important to know what you'll do with your time once you're no longer reporting to a job.
Boredom can turn retirement into a period of prolonged misery if you let it. Rather than run that risk, have an actual plan for filling your days. It could be a combination of hobbies and volunteer work, or even part-time gig work.
It's important to go into retirement knowing you've checked all the right boxes ahead of time. Make sure to tackle these important questions in the coming months if you expect to retire in 2026. That way, you can approach that next phase with more confidence.
