You have worked hard the majority of your life and are nearing the finish line. Please do not let your efforts go to waste. Here are some actions to take as you approach the end of your working career:
Five Years to Go
Estimate – Take a look at your family history and health to figure out how long your retirement savings need to last. Sometimes it can be helpful to use a life expectancy calculator to do this. No one can predict exactly how long they will live but do your best to come up with an approximate age.
Calculate – Determine where the money you will be living off in retirement will come from. Retirement savings can come from pensions, social security, investments, and other sources of income you may earn during this time.
Build Up – Do the best you can to maximize retirement savings. If possible, take advantage of catch-up provisions in retirement plans along with an employer’s match.
Anticipate – Use online retirement calculators to see if your savings and income will last for your projected lifespan. Remember to take inflation into account.
Insure – Purchase disability insurance if your inability to work due to injury will impede your financial future.
Four Years to Go
Budget – Track an entire year’s worth of expenses to estimate an approximate retirement budget. Don’t forget to include out-of-pocket medical expenses, long-term care, taxes, and inflation. If you find this to be daunting, your Money Mentor can help you figure out a budget that will work for you.
Pay Down Debt – Do your best to eliminate all your debt. This includes your mortgage, car loans, and credit card debt. The less money you have going out, the less you need to live on.
Plan – If your housing costs are too high, consider downsizing.
Insure – Look at long–term care insurance and carefully weigh the pros and cons of buying a policy. If someone depends on your income to live, consider purchasing life insurance.
Consult – Talk with your Money Mentor or financial advisor to refine your investment strategy.
Three Years to Go
Catch Up – Complete home maintenance tasks. If possible, anticipate or get ahead of upcoming repairs and replacements. Major repairs – such as replacing a roof – can throw a huge financial curveball your way.
Decide – Look at your Social Security benefits to see the difference in how much you will be paid when you start collecting. Visit Social Security’s site to see your personal statement.
Study – Learn all you need to know about converting your savings into an income stream. In addition, plan how you will withdraw your funds and determine how much you need to take out each year to meet the required minimum distributions guideline.
Supplement – If you foresee money being tight, figure out a way to increase monthly income. You can rent out a bedroom in your house, keep working or start a business.
Assess – Decide the bare minimum you will need for a comfortable retirement. Can you fill in any income gaps or work a little longer?
Two Years to Go
Test – Now is the time to test your retirement budget. Live on it to see if any adjustments need to be made.
Plan – If you have not done so, get your will down and consider establishing a trust. File healthcare directives and appoint a legal power of attorney.
Disconnect – Tell your adult children they are off your payroll and on their own now.
Regroup – If you cannot afford to retire, don’t! Run your worst-case scenario with a financial professional and, if needed, work longer. Delay collecting Social Security and eliminate any unnecessary spending.
One Year to Go
Decide – Contact the Social Security Administration to learn about taking benefits earlier rather than later and choose when you will claim your benefits. The earliest age you may begin taking the benefit is 62, but many choose to wait so they can maximize their Social Security payments.
Roll Over – Meet with a financial professional and plan whether and where to roll over your workplace retirement savings when you retire.
Replace – While you are still working, replace your vehicle(s) to hopefully eliminate future car repairs.
Sign Up – Research Medicare and supplemental medical plans and enroll in Medicare three months before your 65th birthday.
Consult – Seek professional help before withdrawing income from your retirement portfolio.
Following these guidelines can better prepare you to be financially successful when you stop working and enter retirement bliss!
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