29 Dec 15 Steps to Get You Ready for Retirement
15 Steps to Get You Ready for Retirement
If you’re just flying by the seat of your pants hoping that retirement will somehow work itself out, then you need a reality check. You’ve heard the phrase, “If you fail to plan, you plan to fail,” right? Well, it couldn’t be more true, especially when it comes to retirement.
Planning for retirement doesn’t have to be complicated or difficult. Here are 15 steps to help you get ready for a successful and enjoyable retirement.
#1 Identify what your retirement will look like.
What is your idea of retirement? What does it look like for you? It’s important that you ask yourself these questions because it’s different for everyone.
#2 Know your numbers.
Don’t wait until the day you retire to understand your numbers. Educate yourself about your options with social security and your pension. Many retirement investments and programs have strict rules about when you can apply, how much and how often you can withdraw funds, and so on. Get clear on the information you need so you can make the best decisions for your retirement.
#3 Create a budget.
You should be living on a budget now before you retire, but you should also create a sample retirement budget so you can get a handle on what your income needs to be to meet your goals and what your expenses will likely be. In order to create a retirement budget, you’ll need to figure out how much money will be coming in versus how much will be going out. When it comes to determining your expenses during retirement, expect them to be a little different than when you were working full time. Be sure you’re diversifying your investments and considering debt payments in your budget too.
#4 Reduce expenses NOW!
You’ll probably be living on a bit less during retirement, so go ahead and start cutting your expenses now so it’s not such a shock when you retire. Think of it: if you’re saving more now, that just gets you closer to your retirement goals later. How can you feasibly make this happen? Small actions add up over time. For example, decrease your cable cost, stop eating out as often, and make your own coffee rather than buying it from a cafe.
Work to decrease your liabilities. Also, if you’re in debt, NOW is the time to take care of it before you retire. Then you don’t have to worry about making payments when your income is a bit lower later.
#5 Determine your monthly income.
When you know how much money you’re bringing in, you can adjust your expenses accordingly or get a part-time job to make up the difference. If you’re clear on your retirement goals, you can determine how much money you need per month to live the lifestyle you want. It all starts with knowing your numbers.
#6 How is your health?
If you’re struggling with your health, you’re unlikely to enjoy your retirement as much. You want to be able to do everything you dream of in retirement, so be sure to prioritize your health. Get your annual checkups, visit your dentist regularly, and make time to exercise and eat right. Be sure to have an active social life too.
#7 Understand how much risk you need to take.
If you’re well prepared for retirement, you may find that you don’t need to risk as much when it comes to your investments. However, if you’re not as prepared for retirement as you’d like to be, you might need to be a bit riskier with your retirement investments. Either way, consult an informed adviser to help you navigate your level of risk.
#8 Do you need to still work in retirement?
If you’re not “set for life,” then you may need to continue working in some capacity during your retirement. This isn’t all bad, of course, because working some keeps you active and mentally sharp (not to mention gives you some purpose too). There are many ways you can generate more income during retirement. Get creative and take the plunge!
#9 Maximize your 401(k) and IRA contributions.
It’s incredibly important to contribute the maximum amount to your 401(k), IRA, or other retirement plans, especially if your employer matches the amount you deposit. After age 50, take advantage of the rules that allow you to contribute even more so you can “catch up.” Also, consider consulting a knowledgeable financial adviser about consolidating any similar retirement investments or rolling them over to make it easier to manage everything.
#10 Do you have your estate in order?
How detailed and up-to-date is your will or living trust? It’s vital that you revisit these documents on a regular basis during your retirement years to ensure that they are accurate and appropriate for your current situation and circumstances. Contact a lawyer or financial planner to help you make the best decisions for you.
#11 Update your beneficiaries (like yesterday!)
This is critical. If your beneficiary list isn’t updated for your investments, life insurance, and in your will, you must take care of this right away. Don’t delay. It would be tragic if something happened to you before you could make the necessary changes, and your loved ones end up living on a lot less money because you neglected this important responsibility.
#12 What are your social outlets?
When you retire, what are your plans? Do you plan to sit at home and watch reruns of The Addams Family? (Hopefully not!) Who are you going to connect with? Who are you going to travel with? What will you do to occupy the 40 hours a week that you were working?
If your job is your current social network, when you quit working, you may feel really disconnected and lonely. If that’s the case, consider continuing to work or determine to get yourself involved in volunteering or being involved in your community in some way.
#13 Pay off your mortgage.
The sooner you pay off your mortgage, the sooner you won’t have to worry about coming up with that chunk of money each month. As you can imagine, retirement is a lot more relaxing without a mortgage hanging over your head. Being free of that payment means a lot more freedom to utilize that money elsewhere (like traveling, hobbies, or investments).
#14 Be prepared for the unexpected.
No one likes to think about an unexpected illness, a large home repair, or the death of a spouse. But preparing for the unexpected can help you tackle the challenge without breaking the bank. Having an emergency fund and talking with family members about possible scenarios can help you have more peace of mind when life takes an unplanned turn.
#15 Stick to the plan.
Don’t get sidetracked from your retirement plan. It’s not that you can’t make adjustments when needed, but if you stray from your plan too much, you may find yourself not achieving the goals you have for your retirement years. If this is a temptation for you, be honest with yourself, and consider bringing a financial planner on board to help you stay the course.
