The journey to retirement begins to gain greater importance during the last decade of your working years. This is because the steps you take during the last ten years of your career are crucial to securing a stable financial retirement.
Defining Your Ideal Retirement
As you work towards this time, consider how to shape your plan. What are you looking forward to doing most during retirement? Will you stop working completely, or do you plan to work part-time or start a business? There are no one-size-fits-all answers to these questions. Tailor your vision for retirement in a way that aligns with your values and life goals while giving thoughtful consideration to your preparations.
Running an Initial Spending Plan
As retirement approaches, the budgeting process gains greater importance. You will want to review your spending to ensure it aligns with your income and goals. Once you determine your expenses, you can try to save some extra cash for retirement savings and investments.
Checking If You’ve Saved Enough
Review all potential sources of retirement income you may have, including 401(k) and IRA accounts, pensions or 401(a) plans if you have one, and Social Security. Will your income match or exceed your expenses?
Determining Your Desired Living Location
While asset allocation is an important factor in growing your retirement savings, where you choose to retire is a significant determinant of your overall life satisfaction as well as your cost of living.
Considering Future Healthcare Costs
Having reasonable and reliable health insurance should be a top priority for retirees who are about to retire. It’s no surprise that healthcare costs make up a large portion of the budget during retirement – even for those who rely on healthcare. According to the Kaiser Family Foundation, healthcare costs represented 14% of household spending for those relying on healthcare in 2016, and accounted for at least 20% of spending for about three in ten households relying on healthcare that year.
Paying Off Debt
Paying off debt before retirement is a great strategy to reduce overall expenses afterward. It’s particularly important to eliminate high-interest debt, such as credit card debt, in the few years leading up to retirement.
Reviewing Your Asset Allocation
As retirement nears, you may want to shift from an asset growth model to an income model when it comes to your investment portfolio. Review your asset allocation as you approach your retirement date; you may want to shift to a more conservative strategy that prioritizes cash and income-generating investments like bonds.
Choosing Your Team Wisely
For many soon-to-be retirees, building a team of professionals who provide legal, tax, and financial guidance is a valuable way to navigate these challenging decisions. Look for qualified professionals who are always bound to put your interests first and adhere to a fiduciary standard. And remember, it’s never too late to review your retirement plans.
Source: https://www.thebalancemoney.com/steps-to-take-before-retirement-4144782
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