Ten Years Before You Retire
The important thing ten years out is to have a plan. You need to keep saving, of course, but you also need to start getting your end game in mind so that you can have a soft landing. Use a retirement income calculator to figure out just how much money you’ll need to retire. Break it down into monthly installments, but also know what kind of additional savings you’re going to need to make your lifestyle a reality once you and your spouse stop working. Over the course of the next ten years, keep your savings on track with your expectations.
Five Years Before You Retire
You have three main objectives to achieve before you ultimately retire:
- Pay Off Your Debt: Any debt, such as credit card debt, should be paid off before you can even think of retiring. Your mortgage is negotiable. Talk to your financial advisor about whether or not it’s advantageous to pay off your mortgage before retirement.
- Set Your Retirement Date: A final retirement date isn’t just about having enough money. It’s also about leveraging dates like when your employer makes a 401(k) match, and when you plan to apply for Social Security. Review your benefits and coverage, and if you have questions, talk to someone in your HR department to figure out the best date for your retirement.
- Track Down Missing Money: Your parents may have had the same one or two jobs for most of their life. Not you. You may even have had about a dozen by the time you retire. So now is the time to track down any missing retirement accounts you might have and roll them over, especially if they have high fees.
One Year Before You Retire
Now that you’re nearing your actual retirement date, it’s time to start getting more concrete. Set up an income stream so you don’t have to raid your retirement fund every time you get a bill. Money markets are a great way to have liquid cash when you need it. And while you’re at it, get the most out of those work-related benefits that won’t be around a year from now.
Six Months Before You Retire
If you have a choice between a lump-sum retirement fund and an annuity, you need to make that decision now. There are benefits to both. A lump sum might be invested better privately or you might have big medical bills right now. On the other hand, annuities are a simple way to budget for the money you’re going to need in retirement and ensure that it will be there. But it’s not just your needs you have to think about.
While it’s not pleasant to think about, it’s extremely important to fully plan for what your spouse is going to do if and when you pass on. You need to have your life insurance together and have contingency plans in place. On the bright side, once you take care of this planning, it will be out of the way so you can enjoy a pleasant retirement.
Three Months Before You Retire
It might make you feel old, but now’s the time to sign up for Medicare and possibly Social Security, depending on when you’re planning to take its benefits.
Your Last Day of Work
Tell your boss what you really think of him.
Kidding. Enjoy retirement!