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There are 5 factors that matter – money is just one of them

Are you on track for a successful retirement? If you’re not sure, you’re in good company. The level of uncertainty is high among most pre-retirees because knowing exactly what you’ll need is surprisingly hard to pin down.

Most of us assume that with the right amount of savings, our transition into retirement will be as smooth and satisfying as a bubble bath. Sure, money is part of the equation – a large part in fact – but there are other factors that are just as important.

Have you considered the emotional aspect? Family support? How about the physical part? Are you ready to swing at a few curveballs and hunker down through a storm or two?

There are at least five factors that can predict a successful transition into retirement. You don’t need to be a master of all of them but knowing where you stand on each can give you a strong advantage and a whole lot of confidence.

Think carefully and add up your score on each of the following factors to find out where you stand. Be honest, and most importantly, pinpoint what you can improve and take some action now, while you still have time on your side.

1. You spend less than you earn (0-10 points) [_____]

If you spend less than you earn, that means your savings account is growing – which puts you ahead of 60% of all Americans, according to a FINRA study.

Further, if your total savings is greater than $1,000 for every year you’ve been alive, you’re on the winning team. The average 50-year-old has just $48,000 in the bank. One out of four has no money saved whatsoever.

The younger you are, the easier it is to change course, but no matter your age, there’s room for improvement. Lower your expenditures, reduce your debt, and contribute all you can to a 401k or an IRA.

Take all 10 points if you’re spending responsibly, regularly contribute to a 401k or IRA, and have over $1,000 saved for each year of your life.

2. You’re relaxed about most things in life (0-9 points) [_____]

A positive attitude is the foundation of a happy life and retirement. Every day people retire with all kinds of health issues, financial problems, and other challenges, but it’s how they deal with those problems that matter. Many people experience immensely rewarding retirements by enjoying all that they can do. Others struggle by dwelling on what they can’t.

The most common challenges retirees face are health and finance, two infuriatingly unpredictable variables that can affect your activities in retirement. If bad knees keep you from your dream of mountain climbing, you can learn to fly instead and enjoy rarified heights from a different perspective. If circumstances lead you into retirement a few dollars shy of your goal, dial back your travel budget and explore the hidden treasures of lower-cost destinations.

If you can adjust your financial course to find joy in the little things, you’re a master. If you can look past your health problems and see a simple beauty everywhere around you, you’re amazing. If you can adjust your attitude to accept and appreciate what you’re capable of, then you should take all 9 points.

3. Your expenses are flexible (0-8 points) [_____]

Just like you relax your attitude, you need to be able to relax your expenses. What I mean by that, is that when you run into a financial crisis – and you almost certainly will at some point in your life – you can avoid the worst of it by quickly reducing your expenses until it passes.

To illustrate, let’s suppose you’re an average 50-year-old with $135,000 in debt – a couple of car payments, a small mortgage, and student loans. You would pay $2,000 a month for that. You also spend $1,500 on necessities like utilities, food, gas, and insurance. On top of that, you splurge on $500 a month of travel, entertainment, and dining. It’s a good life, and your total monthly expenses are $4,000.

Then, an unexpected catastrophe hits and you lose your job. You can quickly cut the $500 of splurge out of your budget, saving 12.5%, but your savings will drain quickly. On the other hand, if you had no debt, you could carve out $2,500 – a whopping 62.5% of your regular expenditures, protecting your savings for much longer.

Think hard about making long-term commitments like loans, gym memberships, and subscriptions. If you have no debt other than a mortgage, and you can trim out at least a third of your monthly expenses in a pinch, you get all 8 points.

4. You talk about retirement (0-7 points) [_____]

I’ve heard it said that most people spend more time planning a vacation than planning their retirement. It’s hard, I get that. You can’t predict how long it will last, how much healthcare will cost, or how you’ll fill your time for 2-3 decades. Worse, you don’t know how it will end – and you might not even want to know. It’s scary to contemplate all the unknowns and account for everything that can go sideways.

But it’s not hard to ask a question or two, and that’s a good place to start. Take the mystery out of retirement by talking to the experts: other retired people. Find out how they planned, and what were their results? Ask them what they learned and what they would do differently. Ask questions and listen.

Then give it some thought of your own, put together some ideas and try them out with your spouse. Bounce them off your friends and see what they think of your ideas. Revise, revisit, and talk about it some more. In time you’ll find it’s easy and fun to discuss retirement, and in doing so you’ll have a solid and realistic plan for that final chapter.

It takes courage, but you can do it. If you already have, and friends and family are aware of your retirement ideas and support them, you’re right on track and can take all 7 points.

5. You have activities you want to do (0-6 points) [_____]

For years I haven’t had much time to ski, fish, and hike, activities that I used to enjoy immensely in my youth. My career got in the way as it does for most of us. But I’ve been eagerly anticipating retirement so I can get back into them again.

What will you “get back into?”

Boredom is one of the top reasons people end their retirement and go back to work. Activities don’t magically fill your days, so you’ll have to do that yourself. Think about what you like doing, what you used to do, and consider new activities you’d like to undertake.

You don’t need a lot, a few good ideas will suffice. They can be physical or intellectual, and watching TV doesn’t count.

You’ll also need to find joy in sitting still. Retirement comes with a lot of extra time and some of it will involve you alone with your thoughts. Learning to enjoy your own company is a skill like any other. You can practice it now, and you should. Meditation, prayer, mental games, and problem-solving are good exercises. Give it a try. Other people enjoy talking with you, so I’m sure you will too.

If you enjoy your own company and have at least two activities that you’re super excited to do, you’re right on track and can add 6 more points to your score.

Your Retirement Readiness Score

Well, how did you do? Add up your scores and let’s see. There are 40 potential points and the higher your score, the better prepared you are. Remember a good score doesn’t mean you should put in your notice tomorrow. It only means that you’re on the right path to enjoy a rewarding retirement in the future.

Don’t despair if your score is lower than you’d like. It doesn’t mean you’re doomed, it’s just a reality check to help you adjust your course for a better and more fulfilling future. Take this opportunity to reset your priorities so you can be ready for an amazing retirement.

34 to 40: Superstar – You’re smack dab on target. Don’t change a thing and keep going just the way you are. Be a mentor and tell your friends about your plans. Show them how to be prepared.

26 to 33: Apprentice – You’re good, but still honing your talent. You may have a few mischievous habits that need to be controlled. Start with the factors that need the most work and make a few adjustments. You’ll get there – you’re very close.

18 to 25: Tortoise – You understand the importance of retirement preparation but don’t seem inspired to get yourself moving. Pick one factor and dedicate the next 60 days to turning it around. When you do, you’ll feel a tremendous sense of pride. Then you can tackle the others.

17 or Less: Zombie – You may be incorrigible and unless you turn things around right away, you could be destined to stumble through retirement like the walking dead.