Use this checklist to help prepare for retirement
Think you’re ready to put the “me” in retirement?
Deciding when to hang it up and ride off into the sunset is a huge decision. It’s a moment you’ve earned after years of hard work. But in addition to having enough money in the bank to maintain a healthy routine, there are several important things you may want to consider as you get closer to the finish line.
If you think you’re ready to retire between now and the next 18 months, here’s what you can do to prepare
Talk it out
Communication is key to a successful relationship, but you already knew that! Empower research shows 67% of couples who speak regularly about their long-term hopes and dreams are better prepared for the future than those who rarely chat.1
If you have a partner or a spouse, getting on the same page about retirement well ahead of your last day on the job is a small step that can make a big difference.
Before you bid adieu to your job, come up with a game plan for your golden years. How do you envision your retirement? Do you want to relocate or downsize? Do you want to travel the world? Do you want volunteer in your community? As you financially prepare to retire, make sure you have realistic expectations for your retirement lifestyle.
Know your Social Security options
To wait or not to wait — that is the question. When it comes to claiming Social Security, you may become eligible to receive your benefits as soon as you celebrate your 62nd birthday, which is the most popular pick for 34% of Americans. But the longer you sit tight, the more your patience may pay off in the long run. In fact, for each year you delay filing, your amount may increase by 7-8% (until you turn 70).2,3
Prior to retiring, be sure to log on to ssa.gov to access your Social Security account. You can view your earnings history, see your estimated payments and use a variety of calculators to help you make the best choice.
In addition to Social Security, make sure you understand and calculate all your potential income sources. Do you have a pension? Are you planning to work part-time? It’s important to understand all of your income sources as well as the amount you expect to bring in.
Build a budget
When you reach retirement, you likely won’t have the same bills and responsibilities that you have today. Some will go, some will stay and some will pop up. For example, if you typically drive to the office every morning, your gas tab may not be as high when your working days are over. On the other hand, as you age, your healthcare costs may rise.
Mapping out your potential payments can help you track your expenses and balance your priorities as you get used to your newfound freedom.
Review your investments
With retirement around the bend, it’s a good idea to double-check your investment portfolio. Are you diversified? Are your allocations up to speed? Are you confident with where your current risk level is? As your situation begins to change near the end of your career, making sure your investment strategy aligns with your goals, needs and habits can help you stay on the right path.
Also, take a minute to review your retirement plan’s distribution options. Most plans offer flexible preferences, including periodic payments or a lump sum, to fit your unique situation.
Try it out
Practice makes perfect. Doing a retirement dry run can give you a better idea of where you really stand with your savings. Try living off your projected monthly income for a few months to see if you can live comfortably. If it doesn’t go as expected, use this opportunity to make changes and adjust your financial approach. Maxing out your retirement accounts up to the IRS limits, including making catch-up contributions if you’re 50 or older, can help you fill any gaps and pad your nest egg.
Think you’re ready to retire? Use this preparing for retirement checklist to help get ready for your golden years.